FS KKR Capital Corp 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As required by Exchange Act Rule 13(a)-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rules 13a-15(f) and 15d-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: 1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and the dispositions of assets of the Company; 2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and board of directors; and 3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management’s report on internal control over financial reporting is set forth above under the heading “Management’s Report on Internal Control over Financial Reporting” in Item 8 of this annual report on Form 10-K. Attestation Report of the Registered Public Accounting Firm Our registered public accounting firm has issued an attestation report on our internal control over financial reporting. This report appears on page 72. 161 Table of Contents Changes in Internal Control Over Financial Reporting During the quarter ended December 31, 2020, there was no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) or 15d-15(f)) that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. 162 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Item 10 is hereby incorporated by reference from an amendment to this Annual Report on Form 10-K, to be filed with the SEC within 120 days following the end of our fiscal year. Item 11. Executive Compensation. The information required by Item 11 is hereby incorporated by reference from an amendment to this Annual Report on Form 10-K, to be filed with the SEC within 120 days following the end of our fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by Item 12 is hereby incorporated by reference from an amendment to this Annual Report on Form 10-K, to be filed with the SEC within 120 days following the end of our fiscal year. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by Item 13 is hereby incorporated by reference from an amendment to this Annual Report on Form 10-K, to be filed with the SEC within 120 days following the end of our fiscal year. Item 14. Principal Accountant Fees and Services. The information required by Item 14 is hereby incorporated by reference from an amendment to this Annual Report on Form 10-K, to be filed with the SEC within 120 days following the end of our fiscal year. 163 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. a. Documents Filed as Part of this Report The following financial statements are set forth in Item 8: Page Management’s Report on Internal Control over Financial Reporting 71 Report of Independent Registered Public Accounting Firm 72 Report of Independent Registered Public Accounting Firm 75 Consolidated Balance Sheets as of December 31, 2020 and 2019 76 Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 77 Consolidated Statements of Changes in Net Assets for the years ended December 31, 2020, 2019 and 2018 79 Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 80 Consolidated Schedules of Investments as of December 31, 2020 and 2019 81 Notes to Consolidated Financial Statements 112 b. Exhibits Please note that the agreements included as exhibits to this annual report on Form 10-K are included to provide information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement that have been made solely for the benefit of the other parties to the applicable agreement and may not describe the actual state of affairs as of the date they were made or at any other time. The following exhibits are filed as part of this annual report or hereby incorporated by reference to exhibits previously filed with the SEC: 2.1 Agreement and Plan of Merger, by and among FS Investment Corporation, IC Acquisition, Inc., Corporate Capital Trust, Inc. and FS/KKR Advisor, LLC, dated as of July 22, 2018. (Incorporated by reference to Exhibit 2.1 to the Company ’ s Current Report on Form 8-K filed on July 23, 2018.) 2.2 Agreement and Plan of Merger, dated as of November 23, 2020, by and among FS KKR Capital Corp., FS KKR Capital Corp. II, Rocky Merger Sub, Inc. and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 2.1 to the Company ’ s Current Report on Form 8-K filed on November 24, 2020.) 3.1 Second Articles of Amendment and Restatement of FS Investment Corporation. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on April 16, 2014.) 3.2 Articles of Amendment of FS Investment Corporation. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on December 3, 2018.) 3.3 Articles of Amendment of FS Investment Corporation. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on December 19, 2018.) 3.4 Articles of Amendment of FS KKR Capital Corp. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on June 15, 2020.) 3.5 Articles of Amendment of FS KKR Capital Corp. (Incorporated by reference to Exhibit 3.2 to the Company ’ s Current Report on Form 8-K filed on June 15, 2020.) 3.6 Third Amended and Restated Bylaws of FS KKR Capital Corp. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on November 24, 2020.) 3.7 Amendment No. 1 to the Second Amended and Restated Bylaws of FS Investment Corporation. (Incorporated by reference to Exhibit 3.1 to the Company ’ s Current Report on Form 8-K filed on July 23, 2018.) 4.1 Distribution Reinvestment Plan, effective as of June 2, 2014. (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on May 23, 2014.) 4.2 Indenture, dated as of July 14, 2014, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.2 to the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 filed on August 14, 2014.) 164 Table of Contents 4.3 Third Supplemental Indenture, dated as of April 30, 2015, relating to the 4.750% Notes due 2022, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on April 30, 2015.) 4.4 Form of 4.750% Notes due 2022. (Included as Exhibit A to the Third Supplemental Indenture in Exhibit 4.3) (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on April 30, 2015.) 4.5 Fourth Supplemental Indenture, dated as of July 15, 2019, relating to the 4.625% Notes due 2024, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on July 15, 2019.) 4.6 Form of 4.625% Notes due 2024. (Included as Exhibit A to the Fourth Supplemental Indenture in Exhibit 4.5) (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on July 15, 2019.) 4.7 Fifth Supplemental Indenture, dated as of November 20, 2019, relating to the 4.125% Notes due 2025, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to the Company ’ s Current Report on Form 8-K filed on November 20, 2019.) 4.8 Form of 4.125% Notes due 2025. (Included as Exhibit A to the Fifth Supplemental Indenture in Exhibit 4.7) (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 20, 2019.) 4.9 Sixth Supplemental Indenture, dated as of April 30, 2020 relating to the 8.625% Notes due 2025, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.9 filed with the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 filed on May 6, 2020.) 4.10 Form of 8.625% Notes due 2025. (Included as Exhibit A to the Sixth Supplemental Indenture in Exhibit 4.9) (Incorporated by reference to Exhibit 4.9 filed with the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 filed on May 6, 2020.) 4.11 Seventh Supplemental Indenture, dated as of December 10, 2020 relating to the 3.400% Notes due 2026, by and between the Company and U.S. Bank National Association, as trustee. (Incorporated by reference to Exhibit 4.1 filed with the Company ’ s Current Report on Form 8-K for filed on December 10, 2020.) 4.12 Form of 3.400% Notes due 2026. (Included as Exhibit A to the Seventh Supplemental Indenture in Exhibit 4.11) (Incorporated by reference to Exhibit 4.1 filed with the Company ’ s Current Report on Form 8-K for filed on December 10, 2020.) 4.13 Indenture, dated June 28, 2017, by and between The Bank of New York Mellon Trust Company, N.A. and Corporate Capital Trust, Inc. (Incorporated by reference to Exhibit 4.1 to Corporate Capital Trust Inc. ’ s Current Report on Form 8-K filed on July 5, 2017.) 4.14 Form of 5.00% Notes due 2022. (Included as Exhibit A to the Indenture in Exhibit 4.9) (Incorporated by reference to Exhibit 4.1 to Corporate Capital Trust Inc. ’ s Current Report on Form 8-K filed on July 5, 2017.) 4.15* Description of Securities 10.1 Investment Advisory Agreement, dated as of December 20, 2018, by and between FS KKR Capital Corp. and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant ’ s Current Report on Form 8-K filed on December 28, 2018.) 10.2 Administration Agreement, dated as of April 9, 2018, by and between FS Investment Corporation and FS/KKR Advisor, LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant ’ s Current Report on Form 8-K filed on April 9, 2018.) 10.3 Custodian Agreement, dated as of November 14, 2011, by and between the Company and State Street Bank and Trust Company. (Incorporated by reference to Exhibit 10.9 filed with the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 filed on November 14, 2011.) 10.4 Amended and Restated Loan and Security Agreement, dated as of March 4, 2019, by and between Locust Street Funding LLC, JPMorgan Chase Bank, N.A., the lenders party thereto, and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on March 8, 2019.) 10.5 Amended and Restated Senior Secured Revolving Credit Agreement, dated as of November 7, 2019, by and among the Company, FS Investment Corporation II, and FS Investment Corporation III, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders, documentation agents, joint bookrunners, and joint lead arrangers party thereto. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on November 13, 2019.) 165 Table of Contents 10.6 Commitment Increase Letter, dated as of March 3, 2020, among BNP Paribas, ING Capital LLC, the Company, FS KKR Capital Corp. II and JPMorgan Chase Bank, N.A., as administrative agent. (Incorporated by reference to Exhibit 10.6 filed with the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 filed on May 6, 2020.) 10.7† Amendment No. 1 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of May 5, 2020, by and among the Company, FS KKR Capital Corp. II, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto. (Incorporated by reference to Exhibit 10.7 filed with the Company ’ s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 filed on May 6, 2020.) 10.8 Second Amended and Restated Senior Secured Revolving Credit Agreement, dated as of December 23, 2020, by and among the Company and FS KKR Capital Corp. II, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders, documentation agents, joint bookrunners, and joint lead arrangers party thereto. (Incorporated by reference to Exhibit 10.2 to the Company ’ s Current Report on Form 8-K filed on December 30, 2020.) 109 Loan and Servicing Agreement, dated as of December 2, 2015, among CCT Tokyo Funding LLC, Corporate Capital Trust, Inc. and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.42 to Corporate Capital Trust, Inc. ’ s Annual Report on Form 10-K filed on March 21, 2016.) 10.10 First Amendment to Loan and Servicing Agreement, dated September 20, 2017, by an among CCT Tokyo Funding LLC, Corporate Capital Trust, Inc. and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.3 to Corporate Capital Trust, Inc. ’ s Quarterly Report on Form 10-Q filed on November 9, 2017.) 10.11 Second Amendment to Loan and Servicing Agreement, dated as of November 28, 2017, by and among CCT Tokyo Funding LLC, Corporate Capital Trust, Inc. and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.1 to Corporate Capital Trust Inc. ’ s Current Report on Form 8-K filed on November 28, 2017.) 10.12 Fourth Amendment to Loan and Servicing Agreement, dated as of November 30, 2018, by and among CCT Tokyo Funding LLC, Corporate Capital Trust, Inc., and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.18 to the Company ’ s Annual Report on Form 10-K filed on February 28, 2019.) 10.13 Fifth Amendment to Loan and Servicing Agreement, dated as of December 2, 2019, by and among CCT Tokyo Funding LLC, the Company, and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on December 5, 2019.) 10.14 Sixth Amendment to Loan and Servicing Agreement, dated December 1, 2020, by and among CCT Tokyo Funding LLC, FS KKR Capital Corp., and Sumitomo Mitsui Banking Corporation. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on December 2, 2020.) 10.15 Indenture, dated June 25, 2019, by and between FS KKR MM CLO 1 LLC and US Bank National Association. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on July 1, 2019.) 10.16 Amended and Restated Indenture, dated December 22, 2020, by and between FS KKR MM CLO 1 LLC and U.S. Bank National Association. (Incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on December 30, 2020.) 21.1* Subsidiaries of the Company. 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended. 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended. 32.1* Certification of Chief Executive Officer a pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Chief Financial Officer a pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Filed herewith. † Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted attachment to the SEC upon request. 166 Table of Contents c. Financial statement schedules No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements. Item 16. Form 10-K Summary. None 167 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. FS KKR CAPITAL CORP. Date: March 1, 2021 /s/ M ICHAEL C. F ORMAN Michael C. Forman Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated. Date: March 1, 2021 /s/ M ICHAEL C. F ORMAN Michael C. Forman Chief Executive Officer and Director (Principal Executive Officer) Date: March 1, 2021 /s/ S TEVEN L ILLY Steven Lilly Chief Financial Officer (Principal Financial Officer) Date: March 1, 2021 /s/ W ILLIAM G OEBEL William Goebel Chief Accounting Officer (Principal Accounting Officer) Date: March 1, 2021 /s/ B ARBARA A DAMS Barbara Adams Director Date: March 1, 2021 /s/ T ODD B UILIONE Todd Builione Director Date: March 1, 2021 /s/ B RIAN R. F ORD Brian R. Ford Director Date: March 1, 2021 /s/ R ICHARD G OLDSTEIN Richard Goldstein Director Date: March 1, 2021 /s/ M ICHAEL J. H AGAN Michael J. Hagan Director Date: March 1, 2021 /s/ J EFFREY K. H ARROW Jeffrey K. Harrow Director Date: March 1, 2021 /s/ J EREL A. H OPKINS Jerel A. Hopkins Director Date: March 1, 2020 /s/ O SAGIE I MOSAGIE Osagie Imosagie Director Date: March 1, 2021 /s/ J AMES H. K ROPP James H. Kropp Director Date: March 1, 2021 /s/ E LIZABETH S ANDLER Elizabeth Sandler Director 168