What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-09 compared with 2021-05-10 · 1358 added, 1358 removed, 2642 unchanged (51% of the section changed)

This section is long enough that the comparison stopped early. What follows is partial, and the remainder is not necessarily unchanged.

3 unchanged sentences

(in millions, except share and per share amounts)

March 31, 2021

June 30, 2021

December 31, 2020

Investments, at fair value

Non-controlled/unaffiliated investments (amortized cost$4,756 and $5,314,

respectively)

Non-controlled/affiliated investments (amortized cost$679 and $629,

respectively)

Non-controlled/unaffiliated investments (amortized cost$11,025 and $5,314, respectively)

Non-controlled/affiliated investments (amortized cost$761 and $629, respectively)

Controlled/affiliated investments (amortized cost$2,706 and $1,510, respectively)

35 unchanged sentences

Three Months Ended

Six Months Ended

Investment income

40 unchanged sentences

See Note 9 for a discussion of the Companys financing arrangements.

As discussed in Note 3, the Company completed a reverse stock split, effective as of June 15, 2020.

The weighted average shares used in

the per share computation of the net increase (decrease) in net assets resulting from operations reflect the reverse stock split on a retroactive basis.

See notes to unaudited consolidated financial statements.

3 unchanged sentences

Three Months Ended

Six Months Ended

Net investment income (loss)

Net realized gain (loss) on investments, swap contracts and foreign currency

Net change in unrealized appreciation (depreciation) on investments, swap contracts and foreign currency forward contracts (1)

Net realized gain (loss) on investments, foreign currency forward contracts and foreign currency

Net change in unrealized appreciation (depreciation) on investments and foreign currency forward contracts (1)

Net change in unrealized gain (loss) on foreign currency

4 unchanged sentences

Capital share transactions (3)

Issuance of common stock

Repurchases of common stock

10 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities

21 unchanged sentences

Increase (decrease) in other accrued expenses and liabilities

Cash acquired in merger

Other assets acquired from merger net of other assets, net of unrealized depreciation on derivatives

Merger costs capitalized into purchase price

Mark-to-market of merged debt

Net cash provided by (used in) operating activities

13 unchanged sentences

Local and excise taxes paid

Excludes $7,227 of cost of investments acquired from the 2021 Merger.

Excludes $11 of unrealized depreciation on unfunded commitments acquired from the 2021 Merger.

Excludes $3,794 of debt assumed from the 2021 Merger.

See Note 9 for a discussion of the Companys financing arrangements.

During the three months ended March 31, 2021 and 2020, the

Company paid $23 and $36, respectively, in interest expense on the financing arrangements.

unaudited consolidated financial statements.

During the six

months ended June 30, 2021 and 2020, the Company paid $60 and $74, respectively, in interest expense on the financing arrangements.

See notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Statements of Cash Flows

(in millions)

Supplemental disclosure of non-cash operating and financing activities:

In connection with the 2021 Merger, the Company issued common stock of $3,650 and acquired investments at cost of $7,227 and other assets

of $221 and assumed debt of $3,794 and other liabilities of $297.

See notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

1 unchanged sentence

5 Arch Income Fund 2 LLC

(q)(r)(w)(y)(z)

Diversified Financials

5 Arch Income Fund 2 LLC

(l)(n)(q)(v)(w)

Diversified Financials

1 unchanged sentence

Diversified Financials

A10 Capital LLC

Diversified Financials

Abaco Systems, Inc

Capital Goods

ABB CONCISE Optical Group LLC

1 unchanged sentence

Capital Goods

Acproducts Inc

Consumer Durables & Apparel

Advanced Dermatology & Cosmetic Surgery

Health Care Equipment & Services

Advanced Dermatology & Cosmetic Surgery

Health Care Equipment & Services

Advanced Dermatology & Cosmetic Surgery

Health Care Equipment & Services

Advania Sverige AB

Software & Services

R+610, 0.0% PIK (2.0% Max PIK)

Advania Sverige AB

Software & Services

Advania Sverige AB

Software & Services

American Tire Distributors Inc

1 unchanged sentence

L+600, 0.0% PIK (1.0% Max PIK)

American Tire Distributors Inc

Automobiles & Components

L+750, 0.0% PIK (1.5% Max PIK)

Amtek Global Technology Pte Ltd

Automobiles & Components

E+500 PIK (E+500 Max PIK)

Apex Group Limited

3 unchanged sentences

Apex Group Limited

(f)(k)(l)(m)(t)(v)(w)

Diversified Financials

Ardonagh Group Ltd

L+544, 2.3% PIK (2.3% Max PIK)

Apex Group Limited

Diversified Financials

Software & Services

Ardonagh Group Ltd

L+544, 2.3% PIK (2.3% Max PIK)

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Aspect Software Inc

1 unchanged sentence

8.0% PIK (8.0% Max PIK)

Aspect Software Inc

Software & Services

(g)(n)(w)(x)(y)

ATX Networks Corp

(s)(v)(w)(y)(z)

Technology Hardware & Equipment

L+625, 1.5% PIK (1.5% Max PIK)

(f)(k)(l)(m)(t)(v)

Consumer Services

(v)(y)(z)(aa)(ac)

10.0%, 0.0% PIK (8.0% Max PIK)

7 unchanged sentences

Borden Dairy Co

(v)(y)(z)(ac)

Food, Beverage & Tobacco

Caprock Midstream LLC

Charles Taylor PLC

Diversified Financials

Cimarron Energy Inc

Constellis Holdings LLC

Capital Goods

Corsearch Intermediate Inc

Software & Services

Corsearch Intermediate Inc

Software & Services

Corsearch Intermediate Inc

Software & Services

(f)(k)(l)(m)(s)(t)(v)

Capital Goods

CSM Bakery Products

Food, Beverage & Tobacco

Capital Goods

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Software & Services

Dental Care Alliance Inc

(f)(k)(m)(t)(v)

Health Care Equipment & Services

7 unchanged sentences

Eagle Family Foods Inc

(f)(i)(k)(l)(m)(s)(v)

Food, Beverage & Tobacco

Empire Today LLC

Eagleclaw Midstream Ventures LLC

EIF Van Hook Holdings LLC

Entertainment Benefits Group LLC

7 unchanged sentences

L+575, 2.5% PIK (2.5% Max PIK)

Entertainment Benefits Group LLC

(f)(k)(l)(m)(v)

Media & Entertainment

L+575, 2.5% PIK (2.5% Max PIK)

Fairway Group Holdings Corp

(v)(y)(z)(ac)

Food & Staples Retailing

12.0% PIK (12.0% Max PIK)

Fairway Group Holdings Corp

(v)(y)(z)(ac)

Food & Staples Retailing

10.0% PIK (10.0% Max PIK)

FloWorks International LLC

2 unchanged sentences

Capital Goods

FloWorks International LLC

Capital Goods

Foundation Consumer Brands LLC

4 unchanged sentences

Software & Services

Greystone & Co Inc

Diversified Financials

Frontline Technologies Group LLC

Software & Services

Frontline Technologies Group LLC

Software & Services

General Datatech LP

(f)(k)(l)(t)(v)

Software & Services

Greystone Equity Member Corp

Diversified Financials

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Heniff Transportation Systems LLC

3 unchanged sentences

Heniff Transportation Systems LLC

(f)(i)(k)(l)(m)(v)

Transportation

1 unchanged sentence

Transportation

(f)(k)(l)(m)(t)(v)

Commercial & Professional Services

Higginbotham Insurance Agency Inc

HM Dunn Co Inc

(v)(y)(z)(ad)

Capital Goods

3 unchanged sentences

15.0% PIK (15.0% Max PIK)

HM Dunn Co Inc

Capital Goods

15.0% PIK (15.0% Max PIK)

Hudson Technologies Co

15 unchanged sentences

10.8%, 1.0% PIK (1.0% Max PIK)

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

(f)(i)(m)(s)(v)

Jarrow Formulas Inc

(f)(i)(k)(l)(m)(s)(t)(v)

Household & Personal Products

Jo-Ann Stores Inc

Karman Space Inc

2 unchanged sentences

Capital Goods

Karman Space Inc

Capital Goods

KBP Investments LLC

Food & Staples Retailing

KBP Investments LLC

Food & Staples Retailing

Kellermeyer Bergensons Services LLC

(f)(i)(k)(l)(m)(s)(t)(v)

Commercial & Professional Services

1 unchanged sentence

Commercial & Professional Services

Lakeview Farms Inc

Food, Beverage & Tobacco

Lakeview Farms Inc

Food, Beverage & Tobacco

Lakeview Farms Inc

Food, Beverage & Tobacco

Lakeview Farms Inc

Food, Beverage & Tobacco

Lakeview Farms Inc

Food, Beverage & Tobacco

(i)(k)(l)(m)(v)

Commercial & Professional Services

1 unchanged sentence

Commercial & Professional Services

Lionbridge Technologies Inc

Consumer Services

Lipari Foods LLC

4 unchanged sentences

MB2 Dental Solutions LLC

(k)(l)(m)(t)(v)

Health Care Equipment & Services

1 unchanged sentence

Health Care Equipment & Services

Miami Beach Medical Group LLC

MB2 Dental Solutions LLC

Health Care Equipment & Services

Miami Beach Medical Group LLC

(k)(l)(m)(t)(v)

Health Care Equipment & Services

Micronics Filtration Holdings Inc

(v)(y)(z)(ac)

Capital Goods

7.5% PIK (7.5% Max PIK)

Monitronics International Inc

Commercial & Professional Services

Monitronics International Inc

Commercial & Professional Services

Monitronics International Inc

Commercial & Professional Services

Monitronics International Inc

Commercial & Professional Services

Motion Recruitment Partners LLC

5 unchanged sentences

L+750, 0.0% PIK (2.5% Max PIK)

New Era Technology Inc

(i)(l)(m)(t)(v)

Software & Services

New Era Technology Inc

Software & Services

New Era Technology Inc

Software & Services

Omnimax International Inc

(i)(k)(l)(m)(v)

Capital Goods

1 unchanged sentence

Health Care Equipment & Services

P2 Energy Solutions Inc.

Software & Services

P2 Energy Solutions Inc.

Software & Services

Parata Systems

Health Care Equipment & Services

Parata Systems

Health Care Equipment & Services

Parata Systems

Health Care Equipment & Services

P2 Energy Solutions Inc.

Software & Services

Capital Goods

notes to unaudited consolidated financial statements.

1 unchanged sentence

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

P2 Energy Solutions Inc.

Software & Services

P2 Energy Solutions Inc.

(f)(i)(k)(m)(s)(t)(v)

Software & Services

Peak 10 Holding Corp

Telecommunication Services

Capital Goods

Petroplex Acidizing Inc

(v)(y)(z)(ac)

L+900 PIK (L+900 Max PIK)

4 unchanged sentences

Diversified Financials

Production Resource Group LLC

Media & Entertainment

L+300, 5.5% PIK (5.5% Max PIK)

Production Resource Group LLC

Media & Entertainment

Production Resource Group LLC

Media & Entertainment

L+550 PIK (L+550 Max PIK)

Production Resource Group LLC

Media & Entertainment

L+750, 0.0% PIK (3.1% Max PIK)

Project Marron

Consumer Services

Project Marron

Consumer Services

Propulsion Acquisition LLC

(f)(l)(s)(t)(v)

Capital Goods

(i)(l)(s)(t)(v)

Health Care Equipment & Services

Pure Fishing Inc

Consumer Durables & Apparel

Qdoba Restaurant Corp

1 unchanged sentence

Reliant Rehab Hospital Cincinnati LLC

(f)(i)(l)(m)(s)(v)

Health Care Equipment & Services

6 unchanged sentences

RSC Insurance Brokerage Inc

(f)(i)(k)(l)(m)(s)(v)

RSC Insurance Brokerage Inc

Safe-Guard Products International LLC

(f)(i)(m)(s)(t)(v)

Diversified Financials

Capital Goods

L+675, 0.0% PIK (1.0% Max PIK)

C+850, 0.8% PIK (0.8% Max PIK)

Capital Goods

4 unchanged sentences

Health Care Equipment & Services

Sequel Youth & Family Services LLC

Health Care Equipment & Services

Sequential Brands Group Inc.

Consumer Durables & Apparel

SIRVA Worldwide Inc

Commercial & Professional Services

Sorenson Communications LLC

(f)(k)(t)(v)(aa)(ac)

Telecommunication Services

Sound United LLC

Consumer Durables & Apparel

Software & Services

12 unchanged sentences

Commercial & Professional Services

Sweet Harvest Foods Management Co

Food & Staples Retailing

L+775, 1.0% PIK (1.0% Max PIK)

Sweet Harvest Foods Management Co

Food & Staples Retailing

L+775, 1.0% PIK (1.0% Max PIK)

Sweeping Corp of America Inc

Commercial & Professional Services

(f)(i)(m)(s)(v)

Software & Services

2 unchanged sentences

L+1,100 PIK (L+1,100 Max PIK)

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

ThreeSixty Group

L+500, 2.5% PIK (2.5% Max PIK)

ThreeSixty Group

L+500, 2.5% PIK (2.5% Max PIK)

Total Safety US Inc

Capital Goods

(f)(i)(k)(l)(m)(s)(v)

Software & Services

10 unchanged sentences

Truck-Lite Co LLC

(f)(i)(k)(m)(s)(v)

Capital Goods

Virgin Pulse Inc

Software & Services

Warren Resources Inc

L+900, 1.0% PIK (1.0% Max PIK)

Software & Services

Wheels Up Partners LLC

Transportation

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Wheels Up Partners LLC

6 unchanged sentences

Transportation

(f)(k)(l)(m)(t)(v)

Capital Goods

Total Senior Secured LoansFirst Lien

2 unchanged sentences

Senior Secured LoansSecond Lien23.9%

Abaco Systems, Inc

Capital Goods

Advanced Lighting Technologies Inc

Ammeraal Beltech Holding BV

Capital Goods

Amtek Global Technology Pte Ltd

(g)(j)(l)(n)(w)(z)

(g)(v)(w)(y)(z)(ad)

Automobiles & Components

E+500 PIK (E+500 Max PIK)

BCA Marketplace PLC

(v)(y)(z)(ac)

10.0% PIK (10.0% Max PIK)

2 unchanged sentences

L+1,000, 0.5% PIK (0.5% Max PIK)

Constellis Holdings LLC

Capital Goods

L+100, 10.0% PIK (10.0% Max PIK)

Software & Services

Culligan International Co

1 unchanged sentence

Software & Services

Excelitas Technologies Corp

Technology Hardware & Equipment

Fairway Group Holdings Corp

(v)(y)(z)(ac)

Food & Staples Retailing

L+1,100 PIK (L+1,100 Max PIK)

Gruden Acquisition Inc

Transportation

Software & Services

Consumer Durables & Apparel

4 unchanged sentences

Software & Services

Ontic Engineering & Manufacturing Inc

Capital Goods

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Paradigm Acquisition Corp

1 unchanged sentence

Capital Goods

Petrochoice Holdings Inc

9 unchanged sentences

Food, Beverage & Tobacco

14.8% PIK (14.8% Max PIK)

Capital Goods

L+1,075, 0.0% PIK (6.8% Max

L+1,075, 0.0% PIK (6.8% Max PIK)

SIRVA Worldwide Inc

Commercial & Professional Services

Software & Services

Sorenson Communications LLC

(m)(s)(u)(v)(ac)

Telecommunication Services

L+1,150 PIK (L+1,150 Max PIK)

Sound United LLC

Consumer Durables & Apparel

13.5% PIK (13.5% Max PIK)

Sungard Availability Services Capital Inc

1 unchanged sentence

L+400, 2.8% PIK (2.8% Max PIK)

Vantage Specialty Chemicals Inc

Vestcom International Inc

12 unchanged sentences

JW Aluminum Co

(s)(v)(aa)(ad)

One Call Care Management Inc

Health Care Equipment & Services

8.5% PIK (8.5% Max PIK)

Capital Goods

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Velvet Energy Ltd

5 unchanged sentences

Consumer Services

Craftworks Rest & Breweries Group Inc

Consumer Services

14.0% PIK (14.0% Max PIK)

Hilding Anders

(v)(w)(y)(ad)

Consumer Durables & Apparel

Hilding Anders

(v)(w)(y)(ad)

Consumer Durables & Apparel

Hilding Anders

(g)(l)(n)(w)(z)

(v)(w)(y)(z)(ad)

Consumer Durables & Apparel

1 unchanged sentence

Home Partners of America Inc

Intelsat Jackson Holdings SA

(v)(w)(y)(z)(aa)

Media & Entertainment

Total Subordinated Debt

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Asset Based Finance24.9%

801 5th Ave, Seattle, Private Equity

(v)(w)(y)(ad)

801 5th Ave, Seattle, Structure Mezzanine

8.0%, 3.0% PIK (3.0% Max PIK)

Abacus JV, Private Equity

Accelerator Investments Aggregator LP, Private Equity

2 unchanged sentences

Capital Goods

AMPLIT JV LP, Limited Partnership Interest

Diversified Financials

Australis Maritime, Common Stock

1 unchanged sentence

Avida Holding AB, Common Stock

(v)(w)(y)(ad)

Diversified Financials

4 unchanged sentences

Automobiles & Components

Byrider Finance LLC, Sub Note

Automobiles & Components

Callodine Commercial Finance LLC, 2L Term Loan A

31 unchanged sentences

Global Jet Capital LLC, Structured Mezzanine

Commercial & Professional Services

15.0% PIK (15.0% Max PIK)

Global Jet Capital LLC, Structured Mezzanine

Commercial & Professional Services

15.0% PIK (15.0% Max PIK)

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Global Jet Capital LLC, Structured Mezzanine

(j)(u)(v)(m)(w)

Commercial & Professional Services

7 unchanged sentences

Diversified Financials

Home Partners JV, Common Stock

Home Partners JV, Structured Mezzanine

11.0% PIK (11.0% Max PIK)

Home Partners JV, Private Equity

(g)(l)(n)(x)(y)

(v)(w)(y)(ac)

Home Partners JV, Common Stock

(v)(w)(y)(ac)

Home Partners JV 2, Structured Mezzanine

2 unchanged sentences

11.0% PIK (11.0% Max PIK)

Kilter Finance, Preferred Stock

Home Partners JV 2, Private Equity

(v)(w)(y)(ac)

Home Partners JV 2, Private Equity

(v)(w)(y)(ac)

Jet Edge International LLC, Term Loan

Transportation

10.0%, 2.0% PIK (2.0% Max PIK)

Jet Edge International LLC, Term Loan

Transportation

10.0%, 2.0% PIK (2.0% Max PIK)

Kilter Finance, Private Equity

(v)(w)(y)(ad)

Kilter Finance, Preferred Stock

6.0%, 6.0% PIK (6.0% Max PIK)

KKR Central Park Leasing Aggregator L.P., Partnership Interest

Capital Goods

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest

Capital Goods

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Luxembourg Life FundAbsolute Return Fund III, Term Loan

Luxembourg Life FundLong Term Growth Fund, Term Loan

Music IP, Private Equity

Media & Entertainment

Opendoor Labs Inc, 2L Term Loan

NewStar Clarendon 2014-1A Class D

Diversified Financials

Opendoor Labs Inc, 2L Term Loan

Orchard Marine Limited, Class B Common Stock

(v)(w)(y)(ac)

Transportation

Orchard Marine Limited, Series A Preferred Stock

(v)(w)(y)(ac)

Transportation

Pretium Partners LLC P1, Structured Mezzanine

2.8%, 5.3% PIK (5.3% Max PIK)

Pretium Partners LLC P2, Structured Mezzanine

2.0%, 7.5% PIK (7.5% Max PIK)

Prime ST LLC, Private Equity

(v)(w)(y)(ad)

Prime ST LLC, Structured Mezzanine

5.0%, 6.0% PIK (6.0% Max PIK)

Sofi Lending Corp, Purchase Facility

Diversified Financials

Star Mountain Diversified Credit Income Fund III, LP, Private Equity

Diversified Financials

Toorak Capital Funding LLC, Membership Interest

Toorak Capital Partners LLC, Private Equity

Wind River CLO Ltd.

1 unchanged sentence

Diversified Financials

Toorak Capital Funding LLC, Membership Interest

(v)(w)(y)(ad)

Toorak Capital Partners LLC, Private Equity

Toorak Capital Partners LLC, Structured Mezzanine

L+650 PIK (L+650 Max PIK)

Total Asset Based Finance

1 unchanged sentence

Net Asset Based Finance

Strategic Credit Opportunities, LLC22.7%

Strategic Credit Opportunities Partners, LLC

Credit Opportunities JV, LLC18.2%

Credit Opportunities Partners JV, LLC

Diversified Financials

Total Strategic Credit Opportunities Partners

Total Credit Opportunities Partners JV, LLC

Equity/Other13.1% (e)

Abaco Energy Technologies LLC, Common Stock

Abaco Energy Technologies LLC, Preferred Stock

Alion Science & Technology Corp, Class A Membership Interest

Capital Goods

notes to unaudited consolidated financial statements.

1 unchanged sentence

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

Equity/Other18.7% (m)

Alion Science & Technology Corp, Class A Membership Interest

Capital Goods

Amtek Global Technology Pte Ltd, Common Stock

(g)(v)(w)(y)(ad)

Automobiles & Components

Amtek Global Technology Pte Ltd, Ordinary Shares

(g)(w)(y)(ad)

Automobiles & Components

1 unchanged sentence

Amtek Global Technology Pte Ltd, Private Equity

(g)(w)(y)(ad)

Automobiles & Components

3 unchanged sentences

Capital Goods

Arcos LLC/VA, Preferred Stock

Software & Services

L+950 PIK (L+950 Max PIK)

Ardonagh Ltd, Ordinary Shares

4 unchanged sentences

Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim

ASG Technologies, Common Stock

Software & Services

ASG Technologies, Warrant

Software & Services

Aspect Software Inc, Common Stock

2 unchanged sentences

Software & Services

ATX Networks Corp, Common Stock

Technology Hardware & Equipment

AVF Parent LLC, Trade Claim

1 unchanged sentence

Borden (New Dairy Opco), Common Stock

(h)(n)(y)(ac)

Food, Beverage & Tobacco

Catalina Marketing Corp, Common Stock

Media & Entertainment

CDS US Intermediate Holdings Inc, Warrant

Media & Entertainment

Cengage Learning, Inc, Common Stock

2 unchanged sentences

Chisholm Oil & Gas Operating LLC, Series A Units

Cimarron Energy Inc, Common Stock

Cimarron Energy Inc, Participation Option

Constellis Holdings LLC, Private Equity

(f)(v)(y)(ac)

Capital Goods

Crossmark Holdings Inc, Warrant

Commercial & Professional Services

CTI Foods Holding Co LLC, Common Stock

Food, Beverage & Tobacco

Directed LLC, Warrant

Consumer Durables & Apparel

Cubic Corp, Preferred Stock

Software & Services

11.0% PIK (11.0% MAX PIK)

Empire Today LLC, Common Stock

Envigo Laboratories Inc, Series A Warrant

Health Care Equipment & Services

Envigo Laboratories Inc, Series B Warrant

Health Care Equipment & Services

Fairway Group Holdings Corp, Common Stock

Food & Staples Retailing

Fox Head Inc, Common Stock

Consumer Durables & Apparel

Fronton BV, Common Stock

6 unchanged sentences

Technology Hardware & Equipment

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Harvey Industries Inc, Common Stock

Capital Goods

Hilding Anders, Class A Common Stock

Hilding Anders, Class C Common Stock

(v)(w)(y)(ad)

Consumer Durables & Apparel

Hilding Anders, Class B Common Stock

(v)(w)(y)(ad)

Consumer Durables & Apparel

Hilding Anders, Class C Common Stock

Hilding Anders, Class A Common Stock

(v)(w)(y)(ad)

Consumer Durables & Apparel

Hilding Anders, Equity Options

(v)(w)(y)(ad)

Consumer Durables & Apparel

HM Dunn Co Inc, Preferred Stock, Series A

(s)(v)(y)(ad)

Capital Goods

HM Dunn Co Inc, Preferred Stock, Series B

(s)(v)(y)(ad)

Capital Goods

6 unchanged sentences

JW Aluminum Co, Common Stock

(j)(u)(v)(y)(ad)

JW Aluminum Co, Preferred Stock

(j)(u)(v)(ad)

12.5% PIK (12.5% Max PIK)

Maverick Natural Resources, Common Stock

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Maverick Natural Resources LLC, Common Stock

MB Precision Holdings LLC, Class A2 Units

10 unchanged sentences

Capital Goods

3.0% PIK (3.0% Max PIK)

Micronics Filtration Holdings Inc, Preferred Stock, Series C PIK

Capital Goods

7.5% PIK (7.5% Max PIK)

Misys Ltd, Preferred Stock

Software & Services

L+1,025 PIK (L+1,025 Max PIK)

NBG Home, Common Stock

4 unchanged sentences

Health Care Equipment & Services

4,370,566,806

One Call Care Management Inc, Preferred Stock A

7 unchanged sentences

Household & Personal Products

Production Resource Group LLC, Preferred Stock, Series A PIK

Media & Entertainment

Production Resource Group LLC, Preferred Stock, Series B PIK

Media & Entertainment

Professional Plumbing Group Inc, Common Stock

Proserv Acquisition LLC, Class A Common Units

(v)(w)(y)(ac)

Proserv Acquisition LLC, Class A Preferred Units

(v)(w)(y)(ac)

Quorum Health Corp, Trade Claim

2 unchanged sentences

Health Care Equipment & Services

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Ridgeback Resources Inc, Common Stock

(j)(u)(v)(w)(y)

Sequential Brands Group Inc., Common Stock

1 unchanged sentence

Sorenson Communications LLC, Common Stock

(j)(u)(v)(y)(ac)

Telecommunication Services

Sound United LLC, Class A Units

Consumer Durables & Apparel

Sound United LLC, Common Stock

Consumer Durables & Apparel

Sound United LLC, Series I Units

Consumer Durables & Apparel

Sound United LLC, Series II Units

Consumer Durables & Apparel

Stuart Weitzman Inc, Common Stock

1 unchanged sentence

Sungard Availability Services Capital Inc, Common Stock

(s)(u)(v)(y)(ac)

Software & Services

Sweet Harvest Foods Management Co, Warrant

Food & Staples Retailing

Swift Worldwide Resources Holdco Ltd, Common Stock

ThermaSys Corp, Common Stock

(u)(v)(y)(ac)

Capital Goods

5 unchanged sentences

Warren Resources Inc, Common Stock

Zeta Interactive Holdings Corp, Preferred Stock, Series E1

Software & Services

Zeta Interactive Holdings Corp, Preferred Stock, Series F

Software & Services

Zeta Interactive Holdings Corp, Warrant

Zeta Interactive Holdings Corp, Common Stock

Software & Services

6 unchanged sentences

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

18 unchanged sentences

JP Morgan Chase Bank

Security may be an obligation of one or more entities affiliated with the named company.

1 unchanged sentence

basis point spread.

As of March 31, 2021, the three-month London Interbank Offered Rate, or LIBOR or L, was 0.19%, the Euro Interbank Offered Rate, or EURIBOR, was (0.54)%, Canadian Dollar Offer Rate, or CDOR, was 0.44% and the U.S.

As of June 30, 2021, the three-month London Interbank Offered Rate, or LIBOR or L, was 0.15%, the Euro Interbank Offered Rate, or EURIBOR, was (0.54)%, Candian Dollar Offer Rate, or CDOR was 0.44%, and the

Australian Bank Bill Swap Bid Rate, or BBSY, or B, was 0.08%, and the U.S.

Prime Lending Rate, or Prime, was 3.25%.

PIK means paid-in-kind.

PIK income accruals may be adjusted based on the fair value of the underlying investment.

Variable rate

securities with no floor rate use the respective benchmark rate in all cases.

accruals may be adjusted based on the fair value of the underlying investment.

Variable rate securities with no floor rate use the respective benchmark rate in all cases.

Denominated in U.S.

1 unchanged sentence

Fair value determined by the Companys board of directors (see Note 8).

Security or portion thereof held within Race Street Funding LLC.

Security is available as collateral to support the amounts outstanding under

the Senior Secured Revolving Credit Facility (see Note 9).

Security or portion thereof is pledged as collateral supporting the amounts outstanding under the Senior Secured Revolving Credit Facility

(see Note 9).

Security or portion thereof held within FS KKR MM CLO 1 LLC (see Note 9).

Security or portion thereof held within CCT Tokyo Funding LLC and pledged as collateral supporting the amounts outstanding under the revolving

credit facility with Sumitomo Mitsui Banking Corporation (see Note 9).

Security or portion thereof held within CCT Dublin Funding Limited.

Listed investments may be treated as debt for GAAP or tax purposes.

Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving

credit facility with Ally Bank (see Note 9).

notes to unaudited consolidated financial statements.

1 unchanged sentence

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

The investment is not a qualifying asset under the Investment Company Act of 1940, as amended.

A business development company may not acquire

any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the companys total assets.

As of March 31, 2021, 74.3% of the Companys total assets represented

qualifying assets.

Listed investments may be treated as debt for GAAP or tax purposes.

Security is non-income producing.

Security held within IC American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

Security or portion thereof held within CCT Dublin Funding Limited.

Security held within CCT Holdings II, LLC, a wholly-owned subsidiary of the Company.

Security or portion thereof held within CCT Tokyo Funding LLC and pledged as collateral supporting the amounts outstanding under the revolving

credit facility with Sumitomo Mitsui Banking Corporation (see Note 9).

Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior

secured revolving credit facility (see Note 9).

Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving

credit facility with Deutsche Bank AG, New York Branch (see Note 9).

Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving

credit facility with Deutsche Bank AG, New York Branch (see Note 9).

Security or portion thereof held within FS KKR MM CLO 1 LLC (see Note 9).

Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company.

Security held within FSIC Investments, Inc., a wholly-owned subsidiary of the Company.

Security held within IC American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

Security held within IC Arches Investments, LLC, a wholly-owned subsidiary of the Company.

Security held within CCT Holdings II, LLC, a wholly-owned subsidiary of the Company.

Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company.

Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a term loan

credit facility with JPMorgan Chase Bank, N.A.

(see Note 9).

Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving

credit facility with Morgan Stanley Senior Funding, Inc.

(see Note 9).

Security or portion thereof held within Race Street Funding LLC.

Security is available as collateral to support the amounts outstanding under

the Senior Secured Revolving Credit Facility (see Note 9).

Security or portion thereof is pledged as collateral supporting the amounts outstanding under the Senior Secured Revolving Credit Facility

(see Note 9).

The investment, or portion of the investment is not a qualifying asset under the Investment Company Act of 1940, as amended.

development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the companys total assets.

As of June 30, 2021, 73.6% of the

Companys total assets represented qualifying assets.

Security is an unfunded commitment.

The stated rate reflects the spread disclosed at the time of commitment and may not indicate the actual

rate received upon funding.

Reflects the stated spread at the time of commitment, but may not be the actual rate received upon

Security is non-income producing.

Asset is on non-accrual status.

3 unchanged sentences

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

2 unchanged sentences

exercise control over the management or policies of such portfolio company.

As of March 31, 2021, the Company held investments in portfolio companies of which it is deemed to be an affiliated person but is not deemed to

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the three months ended March 31, 2021:

As of June 30, 2021, the Company held investments in portfolio companies of which it is deemed to be an affiliated person but is not deemed to

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person as of June 30, 2021:

Portfolio Company

5 unchanged sentences

Fair Value at

June 30, 2021

Senior Secured LoansFirst Lien

2 unchanged sentences

Borden Dairy Co

Constellis Holdings LLC

Fairway Group Holdings Corp

HM Dunn Co Inc

3 unchanged sentences

Petroplex Acidizing Inc

Sorenson Communications LLC (4)

Sungard Availability Services Capital

ThermaSys Corp

Senior Secured LoansSecond Lien

Constellis Holdings LLC

Sorenson Communications LLC (4)

Sungard Availability Services Capital

Other Senior Secured Debt

3 unchanged sentences

Asset Based Finance

Home Partners JV, Common Stock

Home Partners JV, Structured Mezzanine

Home Partners JV, Private Equity

Home Partners JV, Common Stock

Home Partners JV 2, Structured Mezzanine

Home Partners JV 2, Private Equity

Orchard Marine Limited, Class B Common Stock

Orchard Marine Limited, Series A Preferred Stock

ASG Technologies, Common Stock

ASG Technologies, Warrant

Borden (New Dairy Opco), Common Stock

Charlotte Russe Inc, Common Stock

Fronton BV, Common Stock

HM Dunn Co Inc, Preferred Stock, Series A

HM Dunn Co Inc, Preferred Stock, Series B

Home Partners of America Inc, Common Stock

Home Partners of America Inc, Warrant

JW Aluminum Co, Common Stock

JW Aluminum Co, Preferred Stock

notes to unaudited consolidated financial statements.

1 unchanged sentence

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

6 unchanged sentences

Fair Value at

June 30, 2021

ASG Technologies, Common Stock

ASG Technologies, Warrant

Borden (New Dairy Opco), Common Stock

Charlotte Russe Inc, Common Stock

Constellis Holdings LLC, Private Equity

Fairway Group Holdings Corp, Common Stock

Fronton BV, Common Stock

HM Dunn Co Inc, Preferred Stock, Series A

HM Dunn Co Inc, Preferred Stock, Series B

Home Partners of America Inc, Common Stock

Home Partners of America Inc, Warrant

JW Aluminum Co, Common Stock (5)

JW Aluminum Co, Preferred Stock (5)

Micronics Filtration Holdings Inc, Common Stock

10 unchanged sentences

Proserv Acquisition LLC, Class A Preferred Units

Sorenson Communications LLC, Common

Sungard Availbaility Services Capital Inc, Common

ThermaSys Corp, Common Stock

4 unchanged sentences

sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

Interest, PIK, fee and dividend income presented for the full three months ended March 31, 2021.

(3) Interest,

PIK and dividend income presented for the full six months ended June 30, 2021.

notes to unaudited consolidated financial statements.

1 unchanged sentence

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

As of June 30, 2021

(in millions, except share amounts)

The Company held this investment as of December 31, 2020 but it was not deemed to be an affiliated person of the portfolio

company or deemed to control the portfolio company as of December 31, 2020.

Transfers in or out have been presented at amortized cost.

The Company held this investment as of June 30, 2021 but it was deemed to control the portfolio company as of June 30,

2021 Transfers in or out have been presented at amortized cost.

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Under the Investment Company Act of 1940, as amended, the Company generally is deemed to control a portfolio company if it owns

more than 25% of the portfolio companys voting securities or it has the power to exercise control over the management or policies of such portfolio company.

As of March 31, 2021, the Company held investments in portfolio companies of

which it is deemed to be an affiliated person and deemed to control.

During the three months ended March 31, 2021, the Company disposed of investments in portfolio companies of which it was deemed to be an

affiliated person and deemed to control.

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for

the three months ended March 31, 2021:

As of June 30, 2021, the Company held investments in portfolio companies of which

it is deemed to be an affiliated person and deemed to control.

During the six months ended June 30, 2021, the Company disposed of investments in portfolio companies of which it was deemed to be an affiliated

person and deemed to control.

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control as of June 30,

Portfolio Company

4 unchanged sentences

(Depreciation)

Fair Value at

at June 30, 2021

Senior Secured LoansFirst Lien

1 unchanged sentence

Amtek Global Technology Pte Ltd

HM Dunn Co Inc

One Call Care Management Inc

Production Resource Group LLC

Sound United LLC

Warren Resources Inc

Senior Secured LoansSecond Lien

Amtek Global Technology Pte Ltd

Fairway Group Holdings Corp

Sound United LLC

1 unchanged sentence

Advanced Lighting Technologies Inc

JW Aluminum Co (4)

One Call Care Management Inc

Subordinated Debt

12 unchanged sentences

Toorak Capital Partners LLC, Private Equity

Strategic Credit Opportunities Partners, LLC

Toorak Capital Partners LLC, Structured Mezzanine

Credit Opportunities Partners JV, LLC

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of June 30, 2021

(in millions, except share amounts)

Portfolio Company

Fair Value at

Additions (1)

Reductions (2)

Net Change in

(Depreciation)

at June 30, 2021

Advanced Lighting Technologies Inc, Common Stock

Advanced Lighting Technologies Inc, Warrant

Amtek Global Technology Pte Ltd, Common Stock

Amtek Global Technology Pte Ltd, Ordinary Shares

5 unchanged sentences

Hilding Anders, Equity Options

JW Aluminum Co, Common Stock (4)

JW Aluminum Co, Preferred Stock (4)

One Call Care Management Inc, Common Stock

One Call Care Management Inc, Preferred Stock A

One Call Care Management Inc, Preferred Stock B

Production Resource Group LLC, Preferred Stock, Series A PIK

Production Resource Group LLC, Preferred Stock, Series B PIK

Sound United LLC, Class A Units

2 unchanged sentences

Sound United LLC, Series II Units

notes to unaudited consolidated financial statements.

FS KKR Capital Corp.

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2021

(in millions, except share amounts)

Warren Resources Inc, Common Stock

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of

2 unchanged sentences

sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

Interest, PIK and dividend income presented for the full three months ended March 31, 2021.

(3) Interest,

PIK, fee and dividend income presented for the full six months ended June 30, 2021.

Company held this investment as of December 31, 2020 but it was not deemed to control the portfolio company as of

December 31, 2020.

Transfers in or out have been presented at amortized cost.

notes to unaudited consolidated financial statements.

429 unchanged sentences

Commercial & Professional Services

Global Jet Capital LLC, Structured Mezzanine

Commercial & Professional Services

15.0% PIK (15.0% Max PIK)

notes to unaudited consolidated financial statements.

36 unchanged sentences

15.0% PIK (15.0% Max PIK)

Global Jet Capital LLC, Structured Mezzanine

Commercial & Professional Services

15.0% PIK (15.0% Max PIK)

Global Lending Services LLC, Private Equity

206 unchanged sentences

Software & Services

Zeta Interactive Holdings Corp, Preferred Stock, Series F

Software & Services

notes to unaudited consolidated financial statements.

3 unchanged sentences

(in millions, except share amounts)

Zeta Interactive Holdings Corp, Preferred Stock, Series F

Software & Services

Zeta Interactive Holdings Corp, Warrant

7 unchanged sentences

Settlement Date

December 31, 2020

Unrealized Appreciation

61 unchanged sentences

As of December 31, 2020, the Company held investments in portfolio companies of which it is deemed to be an affiliated person but is not deemed to

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the year ended December 31, 2020:

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person as of December 31, 2020:

Portfolio Company

5 unchanged sentences

Fair Value at

December 31, 2020

Senior Secured LoansFirst Lien

33 unchanged sentences

HM Dunn Co Inc, Preferred Stock, Series B

Home Partners of America Inc, Common Stock

Home Partners of America Inc, Warrant

notes to unaudited consolidated financial statements.

10 unchanged sentences

Fair Value at

December 31, 2020

Home Partners of America Inc, Common Stock

Home Partners of America Inc, Warrant

JW Aluminum Co, Common Stock

41 unchanged sentences

person and deemed to control.

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the year ended

The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control as of

December 31, 2020:

6 unchanged sentences

Fair Value at

December 31, 2020

Senior Secured LoansFirst Lien

32 unchanged sentences

Hilding Anders, ARLE PIK Interest

Hilding Anders, Class A Common Stock

Hilding Anders, Class B Common Stock

Hilding Anders, Class C Common Stock

Hilding Anders, Equity Options

KKR BPT Holdings Aggregator LLC, Membership Interest

notes to unaudited consolidated financial statements.

10 unchanged sentences

Fair Value at

December 31, 2020

Hilding Anders, Class A Common Stock

Hilding Anders, Class B Common Stock

Hilding Anders, Class C Common Stock

Hilding Anders, Equity Options

KKR BPT Holdings Aggregator LLC, Membership Interest

Sound United LLC, Class A Units

20 unchanged sentences

federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

March 31, 2021, the Company had various wholly-owned subsidiaries, including special-purpose financing subsidiaries and subsidiaries through which it holds interests in portfolio companies.

The unaudited consolidated financial statements

include both the Companys accounts and the accounts of its wholly-owned subsidiaries as of March 31, 2021.

June 30, 2021, the Company had various wholly-owned subsidiaries, including special-purpose financing subsidiaries and subsidiaries through which it holds interests in portfolio companies.

The unaudited consolidated financial statements include

both the Companys accounts and the accounts of its wholly-owned subsidiaries as of June 30, 2021.

All intercompany transactions have been eliminated in consolidation.

Certain of the Companys consolidated subsidiaries are

subject to U.S.

Certain of the Companys consolidated subsidiaries are subject to

federal and state income taxes.

The Companys investment objectives are to generate current income and,

to a lesser extent, long-term capital appreciation.

The Companys investment objectives are to generate current income and, to a lesser

extent, long-term capital appreciation.

The Companys portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle-market U.S.

companies and, to a lesser extent,

subordinated loans and certain asset-based financing loans of private U.S.

In addition, a portion of the Companys portfolio may be comprised of equity and equity-related securities, corporate bonds, structured products, other debt

securities and derivatives, including total return swaps and credit default swaps.

The Company is externally managed by FS/KKR

Advisor, LLC, or the Advisor, pursuant to an investment advisory agreement, dated as of December 20, 2018, or the investment advisory agreement.

On April 9, 2018, GSO / Blackstone Debt Funds Management LLC, or GDFM, resigned as the

investment sub-adviser to the Company and terminated the investment sub-advisory agreement, or the investment sub-advisory

agreement, between FB Income Advisor, LLC, or FB Advisor, and GDFM, effective April 9, 2018.

In connection with GDFMs resignation as the investment sub-adviser to the Company, on April 9, 2018,

the Company entered into an investment advisory agreement, or the prior investment advisory agreement, with the Advisor.

The prior investment advisory agreement replaced the amended and restated investment advisory agreement, dated July 17,

2014, or the FB Advisor investment advisory agreement, by and between the Company and FB Advisor.

On June 15, 2020, the

Company filed Articles of Amendment to its Articles of Incorporation, or the Reverse Stock Split Amendment, with the State Department of Assessments and Taxation of the State of Maryland to effect a 4 to 1 reverse split of the Companys shares

of common stock, or the Reverse Stock Split.

companies and, to a lesser extent, subordinated loans and

certain asset-based financing loans of private U.S.

In addition, a portion of the Companys portfolio may be comprised of equity and equity-related securities, corporate bonds, structured products, other debt securities and

derivatives, including total return swaps and credit default swaps.

The Company is externally managed by FS/KKR Advisor, LLC,

or the Advisor, pursuant to an investment advisory agreement, dated as of June 16, 2021, or the investment advisory agreement.

Prior to entering into the investment advisory agreement, the Company was a party to an investment advisory

agreement, dated as of December 20, 2018, with the Advisor, or the prior investment advisory agreement, which remained in effect until June 16, 2021.

On June 15, 2020, the Company filed Articles of Amendment to its Articles of Incorporation, or the Reverse Stock Split Amendment, with the State Department of Assessments and Taxation of the State of

Maryland to effect a 4 to 1 reverse split of the Companys shares of common stock, or the Reverse Stock Split.

The Reverse Stock Split became effective in accordance with the terms of the Reverse Stock Split Amendment on June 15, 2020.

The Reverse Stock Split affected all shareholders uniformly and did not alter any shareholders percentage interest in the Companys equity, except to the extent that the Reverse Stock Split

resulted in some shareholders owning a fractional share.

The Reverse Stock Split affected all shareholders uniformly and did not alter any shareholders percentage interest in

the Companys equity, except to the extent that the Reverse Stock Split resulted in some shareholders owning a fractional share.

In that regard, no fractional shares were issued in connection with the Reverse Stock Split.

Shareholders of record who would have otherwise been entitled to receive a fractional share instead

received a cash payment based on the closing price of the Companys common stock as reported on the NYSE as of June 15, 2020.

A summary of the Companys weighted average number of shares of common stock outstanding and earnings per

share after adjusting for the Reverse Stock Split is as follows:

Weighted average number of shares of common stock outstanding (as previously reported)

Weighted average number of shares of common stock outstanding (as adjusted)

Net investment income per share (as previously reported)

Net investment income per share (as adjusted)

Earnings per share (as previously reported)

Earnings per share (as adjusted)

On November 23, 2020, the Company entered into an Agreement and Plan of Merger, or the 2020 Merger

Agreement, with FS KKR Capital Corp II., a Maryland corporation, or FSKR and, together with the Company, the Funds, Rocky Merger Sub, Inc.,

Shareholders of record

who would have otherwise been entitled to receive a fractional share instead received a cash payment based on the closing price of the Companys common stock as reported on the NYSE as of June 15, 2020.

On June 16, 2021, the Company completed its acquisition, or the 2021 Merger, of FS KKR Capital Corp.

II, or FSKR, pursuant to that

certain Agreement and Plan of Merger, or the 2020 Merger Agreement, dated as of November 23, 2020, by and among the Company, FSKR, Rocky Merger Sub, Inc., a former wholly-owned subsidiary of the Company, or Merger Sub, and the Advisor.

12 for a discussion of the 2021 Merger.

Summary of Significant Accounting Policies

Basis of Presentation:

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance

with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals)

considered necessary for a fair presentation have been included.

For a more complete discussion of significant accounting policies and certain other information, the Companys interim unaudited consolidated financial statements should be read

in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 2020 included in the Companys annual report on Form 10-K for the year ended

December 31, 2020.

Operating results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The December 31, 2020 consolidated balance

sheet and consolidated schedule of investments are

FS KKR Capital Corp.

1 unchanged sentence

(in millions, except share and per share amounts)

Principal Business and

Organization (continued)

a Maryland corporation and wholly-owned subsidiary of the Company, or Merger Sub, and the Advisor.

The 2020 Merger Agreement provides that, subject to the conditions set forth in the 2020 Merger

Agreement, Merger Sub will merge with and into FSKR, with FSKR continuing as the surviving company and as a wholly-owned subsidiary of the Company, or the First Merger, and, immediately thereafter, FSKR will merge with and into the Company, with the

Company continuing as the surviving company or, together with the First Merger, the 2021 Merger.

See Note 12 for additional information.

Summary of Significant Accounting Policies

Basis of Presentation:

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United

States of America, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include

all of the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

more complete discussion of significant accounting policies and certain other information, the Companys interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of

and for the year ended December 31, 2020 included in the Companys annual report on Form 10-K for the year ended December 31, 2020.

Operating results for the three months ended March 31,

2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The December 31, 2020 consolidated balance sheet and consolidated schedule of investments are derived from the Companys

audited consolidated financial statements as of and for the year ended December 31, 2020.

The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under

Accounting Standards Codification Topic 946, Financial ServicesInvestment Companies .

Summary of Significant Accounting

Policies (continued)

derived from the Companys audited consolidated financial statements as of and for the year ended December 31, 2020.

The Company is considered an investment company under GAAP and

follows the accounting and reporting guidance applicable to investment companies under Accounting Standards Codification Topic 946, Financial ServicesInvestment Companies .

Use of Estimates:

preparation of the unaudited 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 financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of the unaudited 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 financial statements and the reported amounts of revenues and expenses during the

reporting period.

Actual results could differ from those estimates.

Capital Gains Incentive Fee:

Pursuant to the terms of the investment advisory agreement, the incentive fee on capital

gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory agreement).

This fee equals 20.0% of the Companys incentive fee capital gains, which shall equal both Corporate

Capital Trust, Inc.s, or CCT, and the Companys realized capital gains (without duplication) on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized

capital depreciation (without duplication) on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by CCT and the Company.

On a quarterly basis, the Company accrues for the capital gains incentive fee by

calculating such fee as if it were due and payable as of the end of such period.

The Company includes unrealized gains in the

calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee.

This accrual reflects the incentive fees that would be payable to the Advisor if the Companys entire portfolio was liquidated at its fair

value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

to the terms of the investment advisory agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory agreement).

This fee equals 20.0% of the

Companys incentive fee capital gains, which shall equal the realized capital gains of Corporate Capital Trust, Inc., or CCT, (as predecessor-by-merger to the

Company), FSKR (as predecessor-by-merger to the Company) and the Company (without duplication) on a cumulative basis from inception, calculated as of the end of each

calendar year, computed net of all realized capital losses and unrealized capital depreciation (without duplication) on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by CCT, FSKR and the Company.

a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

The Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee.

This accrual reflects the incentive fees that would be

payable to the Advisor if the Companys entire portfolio was liquidated at its fair value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are

actually realized.

Subordinated Income Incentive Fee:

Pursuant to the terms of the investment advisory agreement, the Advisor may also be

entitled to receive a subordinated incentive fee on income.

The subordinated incentive fee on income under the investment advisory agreement, which is calculated and payable quarterly in arrears, equals 20.0% of the

Companys pre-incentive fee net investment income for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on the value of the

Companys net assets, equal to 1.75% per quarter, or an annualized hurdle rate of 7.0%.

Pursuant to the terms of the investment advisory agreement, the

Advisor may also be entitled to receive a subordinated incentive fee on income.

The subordinated incentive fee on income under the investment advisory agreement, which is calculated and payable quarterly in arrears, equals 17.5% of the Companys pre-incentive fee net investment income for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on the value of the Companys

net assets, equal to 1.75% per quarter, or an annualized hurdle rate of 7.0%.

As a result, the Advisor will not earn this incentive fee for any quarter until the

2 unchanged sentences

net investment income in any quarter exceeds the hurdle rate, the Advisor will be entitled to a catch-up fee equal to the amount of

the pre-incentive fee net investment income in excess of the

the pre-incentive fee net investment income in excess of the hurdle rate, until the Companys pre-incentive fee net investment income for such

quarter equals 2.12%, or 8.48% annually, of net assets.

Thereafter, the Advisor will be entitled to receive 17.5% of pre-incentive fee net investment income.

See Note 4 for a discussion of

subordinated incentive fee on income under the prior investment advisory agreement.

Reclassifications:

Certain amounts

in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2020 and the audited consolidated financial statements as of and for the year ended December 31, 2020 may have been reclassified to

conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2021.

Revenue Recognition:

Security transactions are accounted for on the trade date.

The Company records interest income on an accrual basis to the extent that it expects to collect such amounts.

Company records dividend income on the ex-dividend date.

Distributions received from limited liability company (LLC) and limited partnership (LP) investments are evaluated to determine

if the distribution should be recorded as dividend income or a return of capital.

The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income.

Companys policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected.

The Company considers many factors relevant to an investment when

placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying

investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment.

If there is reasonable doubt that the Company will receive any previously accrued interest, then the

accrued interest will be written-off.

Payments received on non-accrual investments may be recognized as income or applied to

FS KKR Capital Corp.

3 unchanged sentences

Policies (continued)

hurdle rate, until the Companys pre-incentive fee net investment income for such quarter equals 2.1875%, or 8.75% annually, of net assets.

Thereafter, the Advisor will be entitled to receive 20.0% of pre-incentive fee net investment income.

The subordinated incentive fee on income is subject to a cap equal to (i) 20.0% of the per share pre-incentive fee return for the

then-current and eleven preceding calendar quarters minus the cumulative per share incentive fees accrued and/or payable for the eleven preceding calendar quarters multiplied by (ii) the weighted average number

of shares outstanding during the calendar quarter (or any portion thereof) for which the subordinated incentive fee on income is being calculated.

The definitions of per share pre-incentive fee

return and per share incentive fees under the investment advisory agreement take into account the historic per share pre-incentive fee return of both the Company and CCT, together

with the historic per share incentive fees paid by both the Company and CCT.

For the purpose of calculating the per share pre-incentive fee return, any unrealized appreciation or

depreciation recognized as a result of the purchase accounting for the Companys acquisition of CCT, or the 2018 Merger, is excluded.

Reclassifications:

Certain amounts in the unaudited consolidated financial statements as of and for the three months ended March 31, 2020 and the audited consolidated financial statements as

of and for the year ended December 31, 2020 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three months ended March 31, 2021.

Revenue Recognition:

Security transactions are accounted for on the trade date.

The Company records interest income on an accrual

basis to the extent that it expects to collect such amounts.

The Company records dividend income on the ex-dividend date.

Distributions received from limited liability company (LLC) and limited

partnership (LP) investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

The Company does not accrue as a receivable interest or dividends on loans and securities if it has

reason to doubt its ability to collect such income.

The Companys policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected.

considers many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business

conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment.

If there is reasonable doubt that the

Company will receive any previously accrued interest, then the accrued interest will be written-off.

Payments received on non-accrual investments may be recognized as

income or applied to principal depending upon the collectability of the remaining principal and interest.

Non-accrual investments may be restored to accrual status when principal and interest become current

and are likely to remain current based on the Companys judgment.

Loan origination fees, original issue discount and

market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security.

Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount

are recorded as interest income.

principal depending upon the collectability of the remaining principal and interest.

Non-accrual investments may be restored to accrual status when

principal and interest become current and are likely to remain current based on the Companys judgment.

Loan origination

fees, original issue discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security.

Upon the prepayment of a loan or security, any unamortized loan origination

fees and original issue discount are recorded as interest income.

Structuring and other non-recurring upfront fees are recorded as fee income when earned.

For the three months ended March 31, 2021, the Company recognized $2 in

structuring fee revenue.

For the six months ended June 30, 2021 and 2020,

the Company recognized $15 and $9, respectively, in structuring fee revenue.

The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

Derivative Instruments:

The Companys derivative instruments include foreign currency forward contracts and cross currency swaps.

The Company recognizes all derivative instruments as assets or

liabilities at fair value in its consolidated financial statements.

Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result, the Company presents changes in fair value through net change in

unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations.

Realized gains and losses of the derivative instruments are included in net realized gains (losses) on derivative instruments in the

consolidated statements of operations.

Recent Accounting Pronouncements:

The Companys derivative instruments include foreign currency forward contracts and cross currency

The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements.

Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result,

the Company presents changes in fair value through net change in unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations.

Realized gains and losses of the derivative instruments are included in

net realized gains (losses) on derivative instruments in the consolidated statements of operations.

Recent Accounting

Pronouncements:

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848) , which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by

reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.

2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other

transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference

rate expected to be discontinued because of reference rate reform.

In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848) , which expanded the scope of Topic 848 to include derivative instruments

impacted by discounting transition.

ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022.

The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging

relationships entered into or

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Summary of Significant Accounting

Policies (continued)

evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the

end of the hedging relationship.

The Company is currently evaluating the impact of adopting ASU 2020-04 on its consolidated financial statements.

relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging

relationship.

The Company is currently evaluating the impact of the adoption of ASU 2020-04 and 2021-01 on its consolidated financial statements.

Share Transactions

Below is a summary of transactions with respect

to shares of the Companys common stock during the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

to shares of the Companys common stock during the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

Share Repurchase Program

Fractional Share Repurchase

Issuance of Common Stock (2)

Net Proceeds from Share Transactions

The number of shares repurchased has been retroactively adjusted to reflect the Reverse Stock Split as discussed below.

During the three months ended March 31, 2021, the administrator for the Companys distribution

Issuance of common stock for the 2021 Merger.

Shares were issued at fair value of FSK common stock at the merger date.

During the six months ended June 30, 2021, the administrator for the Companys distribution

reinvestment plan, or DRP, purchased 496,660 shares of common stock in the open market at an average price per share of $18.88 (totaling $9) pursuant to the DRP, and distributed such shares to participants in the DRP.

During the three months ended

March 31, 2020, the administrator for the DRP purchased 270,663 shares of common stock in the open market at an average price per share of $25.12 (totaling $7) pursuant to the DRP, and distributed such shares to participants in the

During the period from April 1, 2021 to May 7, 2021, the administrator for the DRP purchased 221,020 shares of common stock in the open market at an average price per share of $20.94 (totaling $5) pursuant to the DRP, and

distributed such shares to participants in the DRP.

For additional information regarding the terms of the DRP, see Note 5.

December 2018

Share Repurchase Program

In December 2018, the Companys board of directors authorized a stock repurchase program.

Under the program, the Company was permitted to repurchase up to $200 in the aggregate of its outstanding common stock in the open market at prices below the then-current net asset value per share.

During the three months ended March 31, 2020, the Company repurchased 2,235,408 shares of common stock pursuant to the share

repurchase program at an average price per share (inclusive of commissions paid) of $17.79 (totaling $40).

The program has terminated since the aggregate repurchase amount that was approved by the Companys board of directors has been expended.

The number of shares repurchased and the average price per share amounts have been retroactively adjusted to reflect the

Reverse Stock Split as discussed below.

Reverse Stock Split and Fractional Shares

As a result of the Reverse Stock Split, which was effective on June 15, 2020, every four shares of the Companys common stock

issued and outstanding were automatically combined into one share of the Companys common stock, and the number of outstanding shares of the Companys common stock was reduced from approximately 495.0 million to approximately

123.75 million as of June 15, 2020.

The Reverse Stock Split did not modify the rights or preferences of the Companys common stock.

The Company also filed a separate Articles of Amendment to Articles of Incorporation with the State

Department of Assessments and Taxation of the State of Maryland to provide that there would be no change in the par value of $0.001 per share as a result of the Reverse Stock Split.

The Reverse Stock Split affected all shareholders uniformly and did not alter any shareholders percentage interest in the

Companys equity, except to the extent that the Reverse Stock Split resulted in some shareholders owning a fractional share.

In that regard, no fractional shares were issued in connection with the Reverse Stock Split.

Shareholders of record who

During the six months ended

June 30, 2020, the administrator for the DRP purchased 818,573 shares of common stock in the open market at an average price per share of $16.35 (totaling $13) pursuant to the DRP, and distributed such shares to participants in the

During the period from July 1, 2021 to August 9, 2021, the administrator for the DRP purchased 211,067 shares of common stock in the open market at an average price per share

FS KKR Capital Corp.

2 unchanged sentences

Share Transactions (continued)

otherwise been entitled to receive a fractional share instead received a cash payment based on the closing price of the Companys common stock as reported on the NYSE as of June 15,

of $21.58 (totaling $5) pursuant to the DRP, and distributed such shares to participants in the DRP.

For additional information regarding the terms of the DRP, see Note 5.

December 2018 Share Repurchase Program

In December 2018, the Companys board of directors authorized a stock repurchase program.

Under the program, the Company was permitted to repurchase up to $200 in the aggregate of its

outstanding common stock in the open market at prices below the then-current net asset value per share.

During the three

months ended June 30, 2020, the Company repurchased 588,342 shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $12.63 (totaling $7).

During the six months ended

June 30, 2020, the Company repurchased 2,823,750 shares of common stock pursuant to the share repurchase program at an average price per share (inclusive of commissions paid) of $16.71 (totaling $47).

The program has terminated since the

aggregate repurchase amount that was approved by the Companys board of directors has been expended.

The number of shares

repurchased and the average price per share amounts have been retroactively adjusted to reflect the Reverse Stock Split as discussed below.

Reverse Stock Split and Fractional Shares

As a result of the Reverse Stock Split, which was effective on June 15, 2020, every four shares of the Companys common stock issued and outstanding were automatically combined into one share of

the Companys common stock, and the number of outstanding shares of the Companys common stock was reduced from approximately 495.0 million to approximately 123.75 million as of June 15, 2020.

The Reverse Stock Split did not

modify the rights or preferences of the Companys common stock.

The Company also filed a separate Articles of Amendment to Articles of Incorporation with the State Department of Assessments and Taxation of the State of Maryland to provide that

there would be no change in the par value of $0.001 per share as a result of the Reverse Stock Split.

The Reverse Stock Split

affected all shareholders uniformly and did not alter any shareholders percentage interest in the Companys equity, except to the extent that the Reverse Stock Split resulted in some shareholders owning a fractional share.

In that regard,

no fractional shares were issued in connection with the Reverse Stock Split.

Shareholders of record who would have otherwise been entitled to receive a fractional share instead received a cash payment based on the closing price of the Companys

common stock as reported on the NYSE as of June 15, 2020.

Acquisition of FSKR

In accordance with the terms of the 2020 Merger Agreement, at the time of the transactions contemplated by the 2020 Merger Agreement, each

outstanding share of FSKR common stock was converted into the right to receive 0.9498 shares of the Companys common stock.

As a result, the Company issued an aggregate of approximately 161,374,028 shares of its common stock to former FSKR

stockholders.

Related Party Transactions

8 unchanged sentences

interest and may be taken in such other quarter as the Advisor determines.

The prior investment advisory agreement had substantially similar terms, except that cash and cash equivalents were not excluded from gross assets.

See Note 2 for a

discussion of the capital gains and subordinated income incentive fees that the Advisor may be entitled to under the investment advisory agreement.

The prior investment advisory agreement had substantially similar terms as the investment advisory agreement, except that the investment advisory agreement amended the prior

investment advisory agreement to (i) reduce the Companys income incentive

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Related Party

Transactions (continued)

fee rate from 20% to 17.5%;

and (ii) remove the total return lookback provision applicable to the subordinated incentive fee on income from the prior investment advisory agreement.

prior investment advisory agreement, the subordinated incentive fee on income was subject to a cap equal to (i) 20.0% of the per share pre-incentive fee return for the then-current and eleven

preceding calendar quarters minus the cumulative per share incentive fees accrued and/or payable for the eleven preceding calendar quarters multiplied by (ii) the weighted average number of shares outstanding during the calendar

quarter (or any portion thereof) for which the subordinated incentive fee on income was being calculated.

The definitions of per share pre-incentive fee return and per share incentive

fees under the prior investment advisory agreement took into account the historic per share pre-incentive fee return of both the Company and CCT, together with the historic per share incentive fees paid

by both the Company and CCT.

For the purpose of calculating the per share pre-incentive fee return, any unrealized appreciation or depreciation recognized as a result of the purchase accounting for

the Companys acquisition of CCT was excluded.

See Note 2 for a discussion of the capital gains and subordinated income incentive fees that the Advisor may be entitled to under the investment advisory agreement.

In connection with the entry into the investment advisory agreement, the Advisor has agreed to waive income incentive fees in the amount

of $15 per quarter for the first six full fiscal quarters of operations following the closing of the 2021 Merger, commencing on July 1, 2021, for a total waiver of $90.

In addition, the Advisor has agreed to exclude from the calculation of the

subordinated incentive fee on income and the incentive fee on capital gains any changes to the fair value recorded for the assets and liabilities of FSKR resulting solely from the new cost basis of the acquired FSKR investments determined in

accordance with Accounting Standards Codification Topic 805-50, Business CombinationsRelated Issues as a result of the Merger.

On April 9, 2018, the Company entered into an administration agreement with the Advisor, or the administration agreement.

Pursuant to the administration agreement, the Advisor oversees the

Companys day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and

regulatory affairs activities, and other administrative services.

The Advisor also performs, or oversees the performance of, the Companys corporate operations and required administrative services, which includes being responsible for the

financial records that the Company is required to maintain and preparing reports for the Companys stockholders and reports filed with the U.S.

the administration agreement, the Advisor oversees the Companys day-to-day operations, including the provision of general ledger accounting, fund accounting, legal

services, investor relations, certain government and regulatory affairs activities, and other administrative services.

The Advisor also performs, or oversees the performance of, the Companys corporate operations and required administrative

services, which includes being responsible for the financial records that the Company is required to maintain and preparing reports for the Companys stockholders and reports filed with the U.S.

Securities and Exchange Commission, or the SEC.

In addition, the Advisor assists the Company in

calculating its net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to the Companys stockholders, and generally overseeing the payment of the Companys expenses and the

performance of administrative and professional services rendered to the Company by others.

Pursuant to the administration

agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its administration and operations, including the Advisors allocable portion of the compensation and related expenses of certain personnel of

Franklin Square Holdings, L.P., which does business as FS Investments, or FS Investments, and KKR Credit Advisors (US), LLC, or KKR Credit, providing administrative services to the Company on behalf of the Advisor.

The Company reimburses the Advisor

no less than quarterly for all costs and expenses incurred by the Advisor in performing its obligations and providing personnel and facilities under the administration agreement.

The Advisor allocates the cost of such services to the Company based

on factors such as total assets, revenues, time allocations and/or other reasonable metrics.

The Companys board of directors reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed

allocation of administrative expenses among the Company and certain affiliates of the Advisor.

The Companys board of directors then assesses the reasonableness of such reimbursements for expenses allocated to it based on the breadth, depth and

quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available.

In addition, the Companys board of directors considers whether any single

third-party service provider would be capable of providing all such services at comparable cost and quality.

Finally, the Companys board of directors compares the total amount paid to the Advisor for such services as a percentage of the

Companys net assets to the same ratio as reported by other comparable BDCs.

In addition, the Advisor assists the Company in calculating its net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to the Companys stockholders, and generally overseeing the

payment of the Companys expenses and the performance of administrative and professional services rendered to the Company by others.

Pursuant to the administration agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its administration and operations, including the Advisors allocable

portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P., which does business as FS Investments, or FS Investments, and KKR Credit Advisors (US), LLC, or KKR Credit, providing administrative services to

the Company on behalf of the Advisor.

The Company reimburses the Advisor no less than quarterly for all costs and expenses incurred by the Advisor in performing its obligations and providing personnel and facilities under the administration

The Advisor allocates the cost of such services to the Company based on factors such as total assets, revenues, time allocations and/or other reasonable metrics.

The Companys board of directors reviews the methodology employed in

determining how the expenses are allocated to the Company and the proposed allocation of administrative expenses among the Company and certain affiliates of the Advisor.

The Companys board of directors then assesses the reasonableness of such

reimbursements for expenses allocated to it based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available.

addition, the Companys board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality.

Finally, the Companys board of directors compares the

total amount paid to the Advisor for such services as a percentage of the Companys net assets to the same ratio as reported by other comparable BDCs.

FS KKR Capital Corp.

4 unchanged sentences

The following table describes the fees and expenses accrued under the investment

advisory agreement and the administration agreement, as applicable, during the three months ended March 31, 2021 and 2020:

advisory agreement, the prior investment advisory agreement and the administration agreement, as applicable, during the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Related Party

Source Agreement

Investment advisory agreement

Investment advisory agreement and prior investment advisory agreement

Base Management Fee (1)

Investment advisory agreement and prior investment advisory agreement

Subordinated Incentive Fee on

Administration agreement

Administrative Services

During the three months ended March 31, 2021 and 2020, $25 and $30, respectively, in base management fees were paid to the Advisor.

March 31, 2021, $25 in base management fees were payable to the Advisor.

During the three months ended March 31, 2021 and 2020, $1 and $1, respectively, of administrative services expenses related to the

Administrative Services Expenses (3)

During the six months ended June 30, 2021 and 2020, $50 and $60, respectively, in base management fees were paid to the Advisor.

June 30, 2021, $54 in base management fees were payable to the Advisor, a portion of which were fees payable by FSKR at the time of the 2021 Merger.

During the six months ended June 30, 2021 and 2020, $0 and $0, respectively, of subordinated incentive fees on income were paid to the

As of June 30, 2021, subordinated incentive fees on income of $29 were payable to the Advisor, a portion of which were fees payable by FSKR at the time of the 2021 Merger.

During the six months ended June 30, 2021 and 2020, $3 and $3, respectively, of administrative services expenses related to the

allocation of costs of administrative personnel for services rendered to the Company by the Advisor and the remainder related to other reimbursable expenses, including reimbursement of fees related to transactional expenses for prospective

investments, such as fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as broken deal costs.

Broken deal costs were $0.1 for the three months ended March 31, 2021.

The Company paid $1 and $3, respectively, in administrative services expenses to the Advisor during the three months ended March 31, 2021 and 2020.

Broken deal costs were $0.2 for the six months ended June 30, 2021.

The Company paid $3 and $5, respectively, in administrative services expenses to the Advisor during the six months ended June 30, 2021 and 2020.

Potential Conflicts of Interest

1 unchanged sentence

investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed by the same personnel.

For example, the

Advisor is the investment adviser to FS KKR Capital Corp.

II, and the officers, managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS

Investments or KKR Credit.

In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Companys best interests or in the best interest

of the Companys stockholders.

The Companys investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles.

For additional information regarding potential conflicts of

interest, see the Companys annual report on Form 10-K for the year ended December 31, 2020.

The officers,

managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or KKR Credit.

In serving in these multiple and other capacities, they may

have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Companys best interests or in the best interest of the Companys stockholders.

The Companys investment objectives may

overlap with the investment objectives of such investment funds, accounts or other investment vehicles.

For additional information regarding potential conflicts of interest, see the Companys annual report on Form

10-K for the year ended December 31, 2020.

Exemptive Relief

BDC, the Company is subject to certain regulatory restrictions in making its investments.

For example, BDCs generally are not permitted to co-invest with certain affiliated entities in transactions

originated by the BDC or its affiliates in the absence of an exemptive order from the SEC.

However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only

negotiated term.

In an order dated June 4, 2013, or the FS Order, the SEC granted exemptive relief permitting the

Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of its former investment adviser, including FS

Energy and Power Fund, FS KKR Capital Corp.

II and any future BDCs that are advised by its former investment adviser or its affiliated investment advisers.

However, in connection with the investment advisory relationship with the Advisor, and in an

effort to mitigate potential future conflicts of interest, the Companys board of directors authorized and directed that the Company (i) withdraw from the FS Order, except with respect to any transaction in which the Company participated

in reliance on the FS Order prior to April 9, 2018, and (ii) rely on an exemptive relief order, dated January 5, 2021, that permits the Company, subject to the satisfaction of certain conditions,

to co-invest in certain privately negotiated investment transactions, including investments originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.

Affiliated Purchaser Program

As previously disclosed, certain affiliates of the owners of the Advisor committed $100 to a $350 investment vehicle that may invest from time to time in shares of the Companys common stock.

Company is not a party to any transaction with the investment vehicle.

As a BDC, the Company is subject to certain regulatory restrictions in making its investments.

For example, BDCs generally are not

permitted to co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC.

However, BDCs are permitted to, and

may, simultaneously co-invest in transactions where price is the only negotiated term.

In an order dated June 4, 2013, or the FS Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions,

to co-invest in certain privately negotiated investment transactions with certain affiliates of its former investment adviser, including FS Energy and Power Fund and any future BDCs that are advised

by its former investment adviser or its affiliated investment advisers.

However, in connection with the investment advisory relationship with the Advisor, and in an effort to mitigate potential future conflicts of interest, the Companys board

of directors authorized and directed that the Company (i) withdraw from the FS Order, except with respect to any transaction in which the Company participated in reliance on the FS Order prior to April 9, 2018, and (ii) rely on an

exemptive relief order, dated January 5, 2021, that permits the

FS KKR Capital Corp.

1 unchanged sentence

(in millions, except share and per share amounts)

Related Party

Transactions (continued)

Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions, including

investments originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.

Affiliated Purchaser

As previously disclosed, certain affiliates of the owners of the Advisor committed $100 to a $350 investment

vehicle that may invest from time to time in shares of the Companys common stock.

The Company is not a party to any transaction with the investment vehicle.

Distributions

The following table reflects the cash distributions per share that the Company has declared on its common stock during the three months ended March 31, 2021 and 2020:

The following table reflects the cash distributions

per share that the Company has declared on its common stock during the six months ended June 30, 2021 and 2020:

For the Three Months Ended

1 unchanged sentence

March 31, 2020

June 30, 2020

March 31, 2021

June 30, 2021

The amount of each per share distribution has been retroactively adjusted to reflect the Reverse Stock Split as discussed above in Note 3.

On May 7, 2021, the Companys board of directors declared a regular quarterly cash distribution of

$0.60 per share, which will be paid on or about July 2, 2021 to stockholders of record as of the close of business on June 11, 2021.

On August 6, 2021, the Companys board of directors declared a regular quarterly cash distribution

of $0.65 per share, which will be paid on or about October 4, 2021 to stockholders of record as of the close of business on September 15, 2021.

The timing and amount of any future distributions to stockholders are subject to applicable legal

15 unchanged sentences

in open market transactions by the plan administrator will be allocated to a participant based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market.

If a stockholder receives distributions in the form of common stock pursuant to the DRP, such stockholder generally will be subject to the

same federal, state and local tax consequences as if it elected to receive distributions in cash.

If the Companys common stock is trading at or below net asset value, a stockholder receiving distributions in the form of additional common stock

will be treated as receiving a distribution in the amount of cash that they would have received if they had elected to receive the distribution in cash.

If the Companys common stock is trading above net asset value, a stockholder receiving

distributions in the form of additional common stock will be treated as receiving a distribution in the amount of the fair market value of the Companys common stock.

The stockholders basis for determining gain or loss upon the sale of

common stock received in a distribution will be equal to the total dollar amount of the distribution payable to the stockholder.

Any stock received in a distribution will have a holding period for tax purposes commencing on the day following the day

on which the shares of common stock are credited to the stockholders account.

FS KKR Capital Corp.

2 unchanged sentences

Distributions (continued)

The Company may fund its cash distributions to stockholders from any sources of funds

legally available to it, including proceeds from the sale of shares of the Companys common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets,

non-capital gains proceeds from the sale of assets, and dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies.

The Company has not

established limits on the amount of funds it may use from available sources to make distributions.

During certain periods, the Companys distributions may exceed its earnings.

As a result, it is possible that a portion of the distributions the

Company makes may represent a return of capital.

A return of capital generally is a return of a stockholders investment rather than a return of earnings or gains derived from the Companys investment activities.

Each year a statement on

Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of capital, which is a nontaxable

distribution) will be mailed to the Companys stockholders.

If a stockholder receives distributions in the form of common stock pursuant to the DRP,

such stockholder generally will be subject to the same federal, state and local tax consequences as if it elected to receive distributions in cash.

If the Companys common stock is trading at or below net asset value, a stockholder receiving

distributions in the form of additional common stock will be treated as receiving a distribution in the amount of cash that they would have received if they had elected to receive the distribution in cash.

If the Companys common stock is

trading above net asset value, a stockholder receiving distributions in the form of additional common stock will be treated as receiving a distribution in the amount of the fair market value of the Companys common stock.

The stockholders

basis for determining gain or loss upon the sale of common stock received in a distribution will be equal to the total dollar amount of the distribution payable to the stockholder.

Any stock received in a distribution will have a holding period for

tax purposes commencing on the day following the day on which the shares of common stock are credited to the stockholders account.

The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of the Companys common stock, borrowings,

net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, and dividends or other distributions paid to the Company on account of

preferred and common equity investments in portfolio companies.

The Company has not established limits on the amount of funds it may use from available sources to make distributions.

During certain periods, the Companys distributions may

exceed its earnings.

As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital.

A return of capital generally is a return of a stockholders investment rather than a return of earnings

or gains derived from the Companys investment activities.

Each year a statement on Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital gains

on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Companys stockholders.

There can be no assurance that the Company will be able to pay distributions at a specific rate or at all.

The following table reflects the sources of the cash distributions on a tax basis that the Company has paid on its common stock during the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table reflects the sources of the cash distributions on a tax basis that the Company has paid on its common

stock during the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

Source of Distribution

3 unchanged sentences

Long-term capital gains proceeds from the sale of assets

During the three months ended March 31, 2021 and 2020, 86.7% and 89.4%, respectively, of the Companys gross investment income was

During the six months ended June 30, 2021 and 2020, 87.4% and 88.8%, respectively, of the Companys gross investment income was

attributable to cash income earned, 2.8% and 1.8%, respectively, was attributable to non-cash accretion of discount and 9.8% and 9.4%, respectively, was attributable to PIK interest.

5 unchanged sentences

Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term losses.

March 31, 2021, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $37 and $862, respectively.

$85 of such losses were carried over from CCT due to the 2018 Merger, and $177

of such losses were carried over from losses generated by the Company prior to the 2018 Merger.

Because of the loss limitation rules of the Code, some of the tax basis losses may be limited in their use.

Any unused balances resulting from such

limitations may be carried forward into future years indefinitely.

As of March 31, 2021 and December 31, 2020, the

Companys gross unrealized appreciation on a tax basis was $1,201 and $1,121, respectively.

As of March 31, 2021 and December 31, 2020, the Companys gross unrealized depreciation on a tax basis was $1,204 and $1,280,

respectively.

The aggregate cost of the Companys investments for U.S.

federal income tax purposes totaled $7,149 and

$7,622 as of March 31, 2021 and December 31, 2020, respectively.

The aggregate net unrealized appreciation (depreciation) on investments on a tax basis was $(692) and $(842) as of March 31, 2021 and December 31, 2020,

respectively.

The aggregate net unrealized appreciation (depreciation) on investments on a tax basis excludes net unrealized appreciation (depreciation) from merger accounting, foreign currency forward contracts and foreign currency transactions.

June 30, 2021, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $101 and $1,940, respectively.

$85 of such losses were carried over from CCT due to the Companys

acquisition of CCT, or the 2018 Merger, $1,212 were carried over from FSKR due to the 2021 Merger, and $177 of such losses were carried over from losses generated by the Company prior to the 2018 Merger.

Because of the loss limitation rules of the

Code, some of the tax basis losses may be limited in their use.

Any unused balances resulting from such limitations may be carried forward into future years indefinitely.

FS KKR Capital Corp.

2 unchanged sentences

Distributions (continued)

As of March 31, 2021, the Company had a deferred tax liability of $5 resulting from

unrealized appreciation on investments held by the Companys wholly-owned taxable subsidiaries and a deferred tax asset of $57 resulting from net operating losses of the Companys wholly-owned taxable subsidiaries and unrealized

depreciation on investments held by the Companys wholly-owned taxable subsidiaries.

As of March 31, 2021, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully

utilize their generated net operating losses and capital losses, therefore the deferred tax asset was offset by a valuation allowance of $52.

For the three months ended March 31, 2021, the Company did not record a provision for taxes related to

wholly-owned taxable subsidiaries.

As of June 30, 2021 and December 31, 2020, the Companys gross unrealized

appreciation on a tax basis was $1,768 and $1,121, respectively.

As of June 30, 2021 and December 31, 2020, the Companys gross unrealized depreciation on a tax basis was $1,885 and $1,280, respectively.

The aggregate cost of the Companys investments for U.S.

federal income tax purposes totaled $15,566 and $7,622 as of June 30,

2021 and December 31, 2020, respectively.

The aggregate net unrealized appreciation (depreciation) on investments on a tax basis was $(832) and $(842) as of June 30, 2021 and December 31, 2020, respectively.

The aggregate net

unrealized appreciation (depreciation) on investments on a tax basis excludes net unrealized appreciation (depreciation) from merger accounting, foreign currency forward contracts and foreign currency transactions.

As of June 30, 2021, the Company had a deferred tax liability of $7 resulting from unrealized appreciation on investments held by the

Companys wholly-owned taxable subsidiaries and a deferred tax asset of $69 resulting from net operating losses, capital losses, and interest expense limitation carryforwards of the Companys wholly-owned taxable subsidiaries and

unrealized depreciation on investments held by the Companys wholly-owned taxable subsidiaries.

As of June 30, 2021, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net

operating losses and capital losses, therefore the deferred tax asset was offset by a valuation allowance of $62.

For the six months ended June 30, 2021, the Company did not record a provision for taxes related to wholly-owned taxable

subsidiaries.

Investment Portfolio

The following table summarizes the composition of the Companys investment portfolio at cost and fair value as of March 31, 2021

and December 31, 2020:

The following table summarizes the composition of the Companys investment portfolio at cost and fair value as of June 30, 2021 and December 31, 2020:

December 31, 2020

4 unchanged sentences

Asset Based Finance

Strategic Credit Opportunities Partners, LLC

Credit Opportunities Partners JV, LLC

Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on

2 unchanged sentences

5% or more of its voting securities.

As of March 31, 2021, the Company held investments in nine portfolio companies of

which it is deemed to control. As of March 31, 2021, the Company held investments in fourteen portfolio companies of which it is deemed to be an affiliated person but is not deemed to control. For additional

information with respect to such portfolio companies, see footnotes (y) and (z) to the unaudited consolidated schedule of investments as of March 31, 2021 in this quarterly report on Form 10-Q.

As of June 30, 2021, the Company held investments in fourteen portfolio companies of

which it is deemed to control. As of June 30, 2021, the Company held investments in sixteen portfolio companies of which it is deemed to be an affiliated person but is not deemed to control. For additional

information with respect to such portfolio companies, see footnotes (ac) and (ad) to the unaudited consolidated schedule of investments as of June 30, 2021 in this quarterly report on Form 10-Q.

As of December 31, 2020, the Company held investments in ten portfolio companies of which it is deemed to

1 unchanged sentence

respect to such portfolio companies, see footnotes (y) and (z) to the consolidated schedule of investments as of December 31, 2020 in this quarterly report on Form 10-Q.

The Companys investment portfolio may contain loans and other unfunded arrangements that are in the form of lines of credit,

revolving credit facilities, delayed draw credit facilities or other investments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements.

As of March 31,

2021, the Company had unfunded debt investments with aggregate unfunded commitments of $252.0, unfunded equity/other commitments of $205.7 and unfunded commitments of $65.8 of Strategic Credit Opportunities Partners, LLC.

As of December 31,

2020, the Company had unfunded debt investments with aggregate unfunded commitments of $228.4, unfunded equity commitments of $142.9 and unfunded commitments of $65.8 of Strategic Credit Opportunities Partners, LLC.

The Company maintains sufficient

cash on hand and available borrowings to fund such unfunded commitments should the need arise.

FS KKR Capital Corp.

2 unchanged sentences

Investment Portfolio (continued)

For additional details regarding the Companys unfunded debt investments, see the Companys unaudited consolidated schedule of investments as of March 31, 2021 and the

Companys audited consolidated schedule of investments as of December 31, 2020.

The table below describes

investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2021 and December 31, 2020:

The Companys investment portfolio may contain loans and other unfunded

arrangements that are in the form of lines of credit, revolving credit facilities, delayed draw credit facilities or other investments, which require the Company to provide funding when requested by portfolio companies in accordance with the terms

of the underlying agreements.

As of June 30, 2021, the Company had unfunded debt investments with aggregate unfunded commitments of $951.2, unfunded equity/other commitments of $454.7 and unfunded commitments of $350.2 to Credit Opportunities

Partners JV, LLC.

As of December 31, 2020, the Company had unfunded debt investments with aggregate unfunded commitments of $228.4, unfunded equity commitments of $142.9 and unfunded commitments of $65.8 to Credit Opportunities Partners JV,

The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments should the need arise.

For additional details regarding the Companys unfunded debt investments, see the Companys unaudited

consolidated schedule of investments as of June 30, 2021 and the Companys audited consolidated schedule of investments as of December 31, 2020.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2021 and

December 31, 2020:

December 31, 2020

Industry Classification

12 unchanged sentences

Software & Services

Strategic Credit Opportunities Partners, LLC

Credit Opportunities Partners JV, LLC

Technology Hardware & Equipment

1 unchanged sentence

Transportation

Strategic Credit Opportunities Partners, LLC

Strategic Credit Opportunities Partners, LLC, or SCJV, is a joint venture between the Company and South Carolina Retirement Systems Group

Trust, or SCRS.

SCRS purchased its interests in SCJV from Conway Capital, LLC, an affiliate of Guggenheim Life and Annuity Company and Delaware Life Insurance Company, in June 2019, which had no impact on the significant terms governing SCJV other

than an increase in the aggregate capital commitment (but not the percentage of the aggregate capital committed by each member) to SCJV.

SCJVs amended and restated limited liability company agreement, or the SCJV Agreement, requires the

Company and SCRS to provide capital to SCJV of up to $1,000 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital.

Pursuant to the terms of the SCJV Agreement, the Company and SCRS each

have 50% voting control of SCJV and are required to agree on all investment decisions as well as certain other significant actions for SCJV.

SCJV invests its capital in a range of investments, including senior secured loans (both first lien and

second lien) to middle market companies, broadly syndicated loans, equity, warrants and other investments.

As administrative agent of SCJV, the Company performs certain

day-to-day management responsibilities on behalf of SCJV and is entitled to a fee of 0.25% of SCJVs assets under administration, calculated and payable quarterly

As of March 31, 2021, the Company and SCRS have funded approximately $924.8 to SCJV, of which $809.2 was from the Company.

Credit Opportunities Partners JV, LLC

Credit Opportunities Partners JV, LLC (formerly known as Strategic Credit Opportunities Partners, LLC), or COPJV, is a joint venture between the Company and South Carolina Retirement Systems Group Trust,

SCRS purchased its interests in COPJV from Conway Capital, LLC, an affiliate of Guggenheim Life and Annuity Company and Delaware Life Insurance Company, in June 2019, which had no impact on the significant terms governing COPJV other than

an increase in the aggregate capital commitment (but not the percentage of the aggregate capital committed by each member) to COPJV.

Effective as of

FS KKR Capital Corp.

2 unchanged sentences

Investment Portfolio (continued)

Jersey City Funding LLC, or Jersey City Funding, a wholly-owned subsidiary of SCJV, has

a revolving credit facility with Goldman Sachs Bank, or as amended, the Jersey City Funding Credit Facility, which provides for up to $350 of borrowings as of March 31, 2021.

June 18, 2021, Credit Opportunities Partners, LLC, or COP, merged with and into COPJV, with COPJV surviving the merger, or the COPJV Merger.

As of June 18, 2021, COPJV assumed all of

COPs obligations, including any obligations under the credit facilities of COPs wholly-owned special purpose financing subsidiaries, and such subsidiaries became wholly-owned special purpose financing subsidiaries of COPJV, in ease case,

as a result of the consummation of the COPJV Merger.

COPJVs second amended and restated limited liability company agreement, or the COPJV Agreement, requires the Company and SCRS to provide capital to COPJV of up to $2,000 in the aggregate

where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital.

Pursuant to the terms of the COPJV Agreement, the Company and SCRS each have 50% voting control of COPJV and are required to agree on all investment

decisions as well as certain other significant actions for COPJV.

COPJV invests its capital in a range of investments, including senior secured loans (both first lien and second lien) to middle market companies, broadly syndicated loans, equity,

warrants and other investments.

As administrative agent of COPJV, the Company performs certain day-to-day management responsibilities on behalf of COPJV and is entitled

to a fee of 0.25% of COPJVs assets under administration, calculated and payable quarterly in arrears.

As of June 30, 2021, the Company and SCRS have funded approximately $1,599.8 to COPJV, of which $1,399.8 was from the Company.

Jersey City Funding LLC, or Jersey City Funding, a wholly-owned subsidiary of COPJV, has a revolving credit facility with

Goldman Sachs Bank, or as amended, the Jersey City Funding Credit Facility, which provides for up to $350 of borrowings as of June 30, 2021.

The Jersey City Funding Credit Facility provides loans in U.S.

dollars, Australian dollars, Canadian dollars Euros and pounds sterling.

dollar loans bear interest at the rate of LIBOR plus 2.25%.

Foreign currency loans bear interest at the floating rate plus the spread applicable to the specified

dollars, Australian dollars, Canadian

dollars, Euros and pounds sterling.

dollar loans bear interest at the rate of LIBOR (subject to a 0% floor) plus 2.25%.

Foreign currency loans bear interest at the applicable floating rate (subject to a 0% floor) plus the spread applicable

to the specified currency.

Jersey City Funding also pays a commitment fee of up to 0.50% on undrawn commitments.

The Jersey City Funding Credit Facility matures on September 29, 2021.

As of March 31, 2021, total outstanding borrowings under the Jersey City

Funding Credit Facility were $242.8.

As of June 30, 2021, total outstanding borrowings under

the Jersey City Funding Credit Facility were $195.0.

Borrowings under the Jersey City Funding Credit Facility are secured by substantially all of the assets of Jersey City Funding.

Chestnut Street Funding LLC, or Chestnut Street Funding, a wholly-owned subsidiary of SCJV, has a revolving credit facility with Citibank, N.A., or as amended, the Chestnut Street Funding Credit Facility,

which provides for up to $400 of borrowings as of March 31, 2021.

Chestnut Street Funding LLC, or Chestnut Street Funding, a wholly-owned subsidiary of COPJV, has a revolving credit facility with

Citibank, N.A., or as amended, the Chestnut Street Funding Credit Facility, which provides for up to $400 of borrowings as of June 30, 2021.

The Chestnut Street Funding Credit Facility provides loans in U.S.

dollars, Australian dollars, Canadian dollars, Euros and pounds sterling.

dollar loans bear interest at

the rate of three-month LIBOR plus 2.25%.

Foreign currency loans bear interest at the applicable floating rate plus 2.25%.

dollars, Australian dollars,

Canadian dollars, Euros and pounds sterling.

dollar loans bear interest at the rate of three-month LIBOR (subject to a 0% floor) plus 2.25%.

Foreign currency loans bear interest at the applicable floating rate (subject to a 0% floor) plus

Chestnut Street Funding also pays a commitment fee of up to 0.50% on undrawn commitments.

The Chestnut Street Funding Credit

Facility matures on September 18, 2024.

As of March 31, 2021, total outstanding borrowings under the Chestnut Street Funding Credit Facility were $182.4.

Borrowings under the Chestnut Street Funding Credit Facility are secured by

substantially all of the assets of Chestnut Street Funding.

Boxwood Drive Funding LLC, or Boxwood Drive Funding, a

wholly-owned subsidiary of SCJV, has a revolving credit facility with BNP Paribas, or the Boxwood Drive Funding Credit Facility, which provides for up to $300 of borrowings as of March 31, 2021.

The Boxwood Drive Funding Credit Facility

provides for loans in U.S.

dollars, Australian dollars, Canadian dollars, New Zealand dollars, Euros and pounds sterling.

dollar loans bear interest at the rate of LIBOR plus a spread of 2.05% to 3.15% during the reinvestment period and 2.50%

to 3.25% thereafter.

Foreign currency of loans bear interest at the applicable floating rate plus the applicable spread.

The Chestnut Street Funding Credit Facility matures on September 18, 2024.

As of June 30, 2021, total outstanding borrowings under the

Chestnut Street Funding Credit Facility were $182.7.

Borrowings under the Chestnut Street Funding Credit Facility are secured by substantially all of the assets of Chestnut Street Funding.

Boxwood Drive Funding LLC, or Boxwood Drive Funding, a wholly-owned subsidiary of COPJV, has a revolving credit facility with BNP Paribas,

or as amended, the Boxwood Drive Funding Credit Facility, which provides for up to $300 of borrowings as of June 30, 2021.

The Boxwood Drive Funding Credit Facility provides for loans in U.S.

dollars, Australian dollars, Canadian dollars, New

Zealand dollars, Euros and pounds sterling.

dollar loans bear interest at the rate of LIBOR (subject to a 0% floor) plus a spread of 2.05% to 3.15% during the reinvestment period and 2.50% to 3.25% thereafter.

Foreign currency loans bear

interest at the applicable floating rate (subject to a 0% floor) plus the spread applicable to the specified currency.

Boxwood Drive Funding also pays a commitment fee of up to 1.00% on undrawn commitments.

The Boxwood Drive Funding Credit

Facility matures on April 15, 2025.

As of March 31, 2021, total outstanding borrowings under the Boxwood Drive Funding Credit Facility were $28.8.

Borrowings under the Boxwood Drive Funding Credit Facility are secured by substantially all

of the assets of Boxwood Drive Funding.

On March 31, 2021, SCJV sold in a private placement $300 million of aggregate

principal amount of unsecured notes, or the SCJV Notes, to qualified institutional buyers in reliance on Section 4(a)(2) of the Securities Act.

Interest on the SCJV Notes is payable quarterly on the 1st of each of January, April, July and October,

at a fixed annual rate of 4.25%, commencing July 1, 2021.

This interest rate is subject to increase up to 4.75% in the event that the SCJV Notes cease to have an investment grade rating, and the SCJV Notes will be subject to an additional 2.0% of

default interest during the continuance of an event of default.

The SCJV Notes mature on April 1, 2026, unless redeemed, purchased or prepaid prior to such date by SCJV in accordance with their terms.

The SCJV Notes are general unsecured obligations

that rank pari passu with all outstanding and future unsecured and unsubordinated indebtedness that SCJV may issue.

SCJV used the net proceeds from the private placement for general corporate purposes, including to make investments, repay existing

debt and make permitted distributions.

SCOP was in compliance with all covenants required by its financing arrangements as of March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021, the Company sold investments with a cost of $186.1 for proceeds of $193.3 to SCJV and recognized a net realized gain (loss) of $7.2 in connection with

the transactions.

As of March 31, 2021, $259.6 of these sales to SCJV are included in receivable for investments sold in the consolidated statements of assets and liabilities.

As of March 31, 2021 and December 31, 2020, SCJV had total investments with a fair value of $1,655.2 and $1,544.3, respectively.

As of March 31, 2021 and December 31, 2020, SCJV had two and two investments on non-accrual status, respectively.

The Boxwood Drive Funding Credit Facility

matures on April 15, 2025.

As of June 30, 2021, total outstanding borrowings under the Boxwood Drive Funding Credit Facility were $29.0.

Borrowings under the Boxwood Drive Funding Credit Facility are secured by substantially all of the

assets of Boxwood Drive Funding.

Big Cedar Creek LLC, or Big Cedar Creek Funding, a wholly-owned subsidiary of COPJV, has a

revolving credit facility with BNP Paribas, or as amended, the Big Cedar Creek Funding Credit Facility, which provides for up to $300 of borrowings as of June 30, 2021.

The Big Cedar Creek Funding Credit Facility provides loans in U.S.

Australian dollars, Canadian dollars, New Zealand dollars, Euros and pounds sterling.

dollar loans bear interest at the rate of LIBOR (subject to a 0% floor) plus a spread of 1.85% to 2.55% during the reinvestment period and 2.00% to 2.65%

Foreign currency loans bear interest at the applicable floating rate (subject to a 0% floor) plus a spread of 1.85% to 2.55% during the reinvestment period

FS KKR Capital Corp.

2 unchanged sentences

Investment Portfolio (continued)

Below is a summary of SCJVs portfolio, followed by a listing of the individual

loans in SCJVs portfolio as of March 31, 2021 and December 31, 2020:

and 2.00% to 2.65% thereafter.

Big Cedar Creek Funding also pays a commitment fee of up to 1.00% on undrawn commitments.

The Big Cedar Creek Funding Credit Facility matures on March 11,

As of June 30, 2021, total outstanding borrowings under the Big Cedar Creek Funding Credit Facility were $94.3.

Borrowings under the Big Cedar Creek Funding Credit Facility are secured by substantially all of the assets of Big Cedar

Green Creek LLC, or Green Creek Funding, a wholly-owned subsidiary of COPJV, has a revolving credit facility with

Goldman Sachs Bank, or as amended, the Green Creek Funding Credity Facility, which provides for up to $500 of borrowings as of June 30, 2021.

The Green Creek Credit Facility provides for loans in U.S.

dollars, Canadian dollars, Euros and pounds

dollar loans bear interest at the rate of three-month LIBOR (subject to a 0% floor) plus 3.30%.

Foreign currency loans bear interest at the rate of the applicable floating rate (subject to a 0% floor) plus the spread applicable to the

specified currency.

Green Creek Funding also pays a commitment fee of up to 3.30% on undrawn commitments.

The Green Creek Funding Credit Facility matures on January 30, 2022.

As of June 30, 2021, total outstanding borrowings under the Green

Creek Funding Credity Facility were $420.3.

Borrowings under the Green Creek Funding Credit Facility are secured by substantially all of the assets of Green Creek Funding.

On March 31, 2021, COPJV sold in a private placement $300 million of aggregate principal amount of unsecured notes, or the COPJV Notes, to qualified institutional buyers in reliance on

Section 4(a)(2) of the Securities Act.

Interest of the COPJV Notes is payable quarterly on the 1st of each of January, April, July and October, at a fixed annual rate of 4.25%, commencing July 1, 2021.

This interest rate is subject to

increase up to 4.75% in the event that the COPJV Notes cease to be rated investment grade, and the COPJV Notes will be subject to an additional 2.0% of default interest during the continuance of an event of default.

The COPJV Notes mature on

April 1, 2026, unless redeemed, purchased or prepaid prior to such date by COPJV in accordance with their terms.

The COPJV Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured and unsubordinated

indebtedness that COPJV may issue.

COPJV used the net proceeds from the private placement for general corporate purposes, including to make investments, repay existing debt and make permitted distributions.

COPJV was in compliance with all covenants required by its financing arrangements as of June 30, 2021 and December 31, 2020.

During the six months ended June 30, 2021, the Company sold investments with a cost of $237.6 for proceeds of $251.0 to

COPJV and recognized a net realized gain (loss) of $13.4 in connection with the transactions.

As of June 30, 2021, $317.7 of these sales to COPJV are included in receivable for investments sold in the consolidated statements of assets and

As of June 30, 2021 and December 31, 2020, COPJV had total investments with a fair value of $2,852.3

and $1,544.3, respectively.

As of June 30, 2021 and December 31, 2020, COPJV had two and two investments on non-accrual status, respectively.

Below is a summary of COPJVs portfolio, followed by a listing of the individual loans in COPJVs portfolio as of June 30,

2021 and December 31, 2020:

Total debt investments (1)

Weighted average current interest rate on debt investments (2)

Number of portfolio companies in SCJV

Number of portfolio companies in COPJV

Largest investment in a single portfolio company (1)

5 unchanged sentences

Investment Portfolio (continued)

Strategic Credit Opportunities Partners, LLC Portfolio

As of March 31, 2021 (in millions)

Credit Opportunities Partners JV, LLC Portfolio

As of June 30, 2021 (in millions)

Interest Rate (b)

3 unchanged sentences

ABB CONCISE Optical Group LLC

Transportation

Ammeraal Beltech Holding BV

Capital Goods

Apex Group Limited

2 unchanged sentences

Diversified Financials

Apex Group Limited

Diversified Financials

Apex Group Limited

Diversified Financials

Ardonagh Group Ltd

1 unchanged sentence

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

BearCom Acquisition Corp

Technology Hardware & Equipment

Technology Hardware &

BearCom Acquisition Corp

Technology Hardware & Equipment

Technology Hardware &

BearCom Acquisition Corp

Technology Hardware & Equipment

Big Bus Tours Ltd

Consumer Services

Big Bus Tours Ltd

Consumer Services

Bugaboo International BV

Consumer Durables & Apparel

Technology Hardware &

FS KKR Capital Corp.

3 unchanged sentences

Interest Rate (b)

Cambium Learning Group Inc

Big Bus Tours Ltd

Consumer Services

Catapult Learning LLC

Big Bus Tours Ltd

Consumer Services

Bugaboo International BV

Consumer Durables &

Cambium Learning Group Inc

Consumer Services

Catapult Learning LLC

14 unchanged sentences

Consumer Services

CSM Bakery Products

Food, Beverage & Tobacco

Eacom Timber Corp

Capital Goods

Software & Services

Distribution International Inc

Eagle Family Foods Inc

Food, Beverage &

Eagleclaw Midstream Ventures LLC

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

EIF Van Hook Holdings LLC

Entertainment Benefits Group LLC

Media & Entertainment

FloWorks International LLC

Capital Goods

Frontline Technologies Group LLC

3 unchanged sentences

HealthChannels LLC

Health Care Equipment & Services

Huws Gray Ltd

Commercial & Professional Services

Equipment & Services

Professional Services

Industria Chimica Emiliana Srl

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

KBP Investments LLC

Food & Staples

Kellermeyer Bergensons Services LLC

Professional Services

Kettle Cuisine LLC

Food, Beverage &

Professional Services

FS KKR Capital Corp.

3 unchanged sentences

Interest Rate (b)

Kellermeyer Bergensons Services LLC

Commercial & Professional Services

Kettle Cuisine LLC

Food, Beverage & Tobacco

Lionbridge Technologies Inc

Consumer Services

Lipari Foods LLC

Food & Staples

Monitronics International Inc

Professional Services

Ontic Engineering & Manufacturing Inc

Capital Goods

Parts Town LLC

Precision Global Corp

8 unchanged sentences

Reliant Rehab Hospital Cincinnati LLC

Health Care Equipment & Services

Equipment & Services

Revere Superior Holdings Inc

Software & Services

RSC Insurance Brokerage Inc

Safe-Guard Products International LLC

2 unchanged sentences

Smart & Final Stores LLC

Food & Staples Retailing

Food & Staples

Staples Canada

(e)(h)(i)(k)(n)

Technimark LLC

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Total Safety US Inc

Capital Goods

Transaction Services Group Ltd

Software & Services

Virgin Pulse Inc

Transaction Services Group Ltd

Software & Services

WireCo WorldGroup Inc

Capital Goods

Yak Access LLC

3 unchanged sentences

Net Senior Secured LoansFirst Lien

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Senior Secured LoansSecond Lien33.3%

Access CIG LLC

Commercial & Professional Services

Professional Services

Ammeraal Beltech Holding BV

1 unchanged sentence

BCA Marketplace PLC

EaglePicher Technologies LLC

Capital Goods

Excelitas Technologies Corp

Technology Hardware & Equipment

Technology Hardware &

Software & Services

Paradigm Acquisition Corp

Equipment & Services

Pure Fishing Inc

Consumer Durables &

Resource Label Group LLC

Rise Baking Company

Food, Beverage &

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Capital Goods

1 unchanged sentence

SIRVA Worldwide Inc

Commercial & Professional Services

Professional Services

Transportation

Watchfire Enterprises Inc

Technology Hardware & Equipment

Technology Hardware &

WireCo WorldGroup Inc

3 unchanged sentences

Total Senior Secured LoansSecond Lien

Other Senior Secured Debt0.8%

Velvet Energy Ltd

Total Other Senior Secured Debt

Subordinated Debt2.7%

4 unchanged sentences

Comet Aircraft S.a.r.l., Common Stock

(e)(g)(n) (o)

Capital Goods

8 unchanged sentences

Diversified Financials

Home Partners JV, Common Stock

Home Partners JV, Structured Mezzanine

KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest

1 unchanged sentence

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Luxembourg Life FundAbsolute Return Fund I, 1L Term Loan

Luxembourg Life FundLong Term Growth Fund, 1L Term Loan

Luxembourg Life FundAbsolute Return Fund III, Term Loan

(e)(h)(k) (n)

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Luxembourg Life FundAbsolute Return Fund III, Term Loan

Luxembourg Life FundLong Term Growth Fund, Term Loan

(e)(h)(i)(k)(n)

NewStar Clarendon 2014-1A Class D

(e)(k)(n) (o)

Diversified Financials

2 unchanged sentences

Sealane Trade Finance

Total Asset Based Finance

Unfunded Commitments

Net Asset Based Finance

Equity/Other5.7%

Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock

Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim

FS KKR Capital Corp.

3 unchanged sentences

Interest Rate (b)

Sealane Trade Finance

Total Asset Based Finance

Equity/Other7.2%

ASG Technologies, Common Stock

Software & Services

Belk Inc, Common Stock

Home Partners of America Inc, Common Stock

Zeta Interactive Holdings Corp, Common Stock

Software & Services

Total Equity/Other

5 unchanged sentences

basis point spread.

As of March 31, 2021, the three-month London Interbank Offered Rate, or LIBOR or L, was 0.19%, the Euro Interbank Offered Rate, or EURIBOR, was (0.54)%, the Australian Bank Bill Swap Bid Rate, or BBSY or

B, was 0.09% and the Canadian Dollar Offer Rate, or CDOR, was 0.44%.

Swap Bid Rate, or BBSY was 0.08%, and the U.S.

Prime Lending Rate, or Prime, was 3.25%.

PIK means paid-in-kind.

PIK income accruals may be adjusted based on the fair value of

the underlying investment.

Variable rate securities with no floor rate use the respective benchmark rate in all cases.

PIK income accruals may be adjusted based on the fair

value of the underlying investment.

Denominated in U.S.

5 unchanged sentences

rate received upon funding.

Asset is on non-accural status.

Security or portion thereof held within Jersey City Funding LLC and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with Goldman Sachs Bank.

Asset is on non-accrual status.

Security or portion thereof held within Big Cedar Creek LLC and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with BNP Paribas.

Security or portion thereof held within Boxwood Drive Funding and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with BNP Paribas.

Security or portion thereof held within Chestnut Street Funding LLC and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with Citibank.

Security or portion thereof held within JCF Cayman Ltd and is pledged as collateral supporting the amounts outstanding under the revolving

Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving

credit facility with Goldman Sachs Bank.

3 unchanged sentences

Investment Portfolio (continued)

Security or portion thereof held within Boxwood Drive Funding and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with BNP Paribas.

Security or portion thereof held within IC II American Energy Investment, Inc., a wholly-owned subsidiary of the company.

Security or portion thereof held within JCF Cayman Ltd and is pledged as collateral supporting the amounts outstanding under the revolving

credit facility with Goldman Sachs Bank.

Security or portion thereof held within Jersey City Funding LLC and is pledged as collateral supporting the amounts outstanding under the

revolving credit facility with Goldman Sachs Bank.

Security is non-income producing.

Strategic Credit Opportunities Partners, LLC Portfolio

Credit Opportunities Partners JV, LLC Portfolio

As of December 31, 2020 (in millions)

11 unchanged sentences

Ardonagh Group Ltd

E+750, 0.0% PIK

(2.3% Max PIK)

Ardonagh Group Ltd

L+750, 0.0% PIK

(2.3% Max PIK)

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

Arrotex Australia Group Pty Ltd

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

BearCom Acquisition Corp

Technology Hardware & Equipment

Technology Hardware &

BearCom Acquisition Corp

Technology Hardware & Equipment

Technology Hardware &

BearCom Acquisition Corp

Technology Hardware & Equipment

Technology Hardware &

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Big Bus Tours Ltd

3 unchanged sentences

Bugaboo International BV

Consumer Durables & Apparel

Consumer Durables &

Cambium Learning Group Inc

4 unchanged sentences

Consumer Services

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Catapult Learning LLC

11 unchanged sentences

CSM Bakery Products

Food, Beverage & Tobacco

Food, Beverage &

Diamond Resorts International Inc

4 unchanged sentences

HealthChannels LLC

Health Care Equipment & Services

Equipment & Services

Huws Gray Ltd

Commercial & Professional Services

E+500, 2.3% PIK

(2.3% Max PIK)

Commercial & Professional Services

L+525, 2.3% PIK

(2.3% Max PIK)

Commercial & Professional Services

E+500, 2.3% PIK

(2.3% Max PIK)

Commercial & Professional Services

L+525, 2.3% PIK

(2.3% Max PIK)

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Professional Services

Industria Chimica Emiliana Srl

Pharmaceuticals, Biotechnology & Life Sciences

Pharmaceuticals,

Biotechnology & Life

Kellermeyer Bergensons Services LLC

Commercial & Professional Services

Professional Services

Kettle Cuisine LLC

Food, Beverage & Tobacco

Food, Beverage &

Koosharem LLC

Commercial & Professional Services

Professional Services

Lionbridge Technologies Inc

Consumer Services

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

MedAssets Inc

Health Care Equipment & Services

Equipment & Services

Parts Town LLC

9 unchanged sentences

Reliant Rehab Hospital Cincinnati LLC

Health Care Equipment & Services

Equipment & Services

Roadrunner Intermediate Acquisition Co LLC

Health Care Equipment & Services

Equipment & Services

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Safe-Guard Products International LLC

Diversified Financials

Capital Goods

PIK (1.0% Max

Smart & Final Stores LLC

Food & Staples Retailing

Staples Canada

3 unchanged sentences

Transaction Services Group Ltd

Software & Services

Virgin Pulse Inc

Software & Services

Yak Access LLC

5 unchanged sentences

Access CIG LLC

Commercial & Professional Services

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Ammeraal Beltech Holding BV

2 unchanged sentences

Excelitas Technologies Corp

Technology Hardware & Equipment

Software & Services

Resource Label Group LLC

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Investment Portfolio (continued)

Interest Rate (b)

Capital Goods

L+1,075, 0.0%

PIK (6.8% Max

SIRVA Worldwide Inc

Commercial & Professional Services

Professional Services

Watchfire Enterprises Inc

Technology Hardware & Equipment

Technology Hardware &

WireCo WorldGroup Inc

2 unchanged sentences

Capital Goods

PIK (0.5% Max

Total Senior Secured LoansSecond Lien

21 unchanged sentences

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Lenovo Group Ltd, Structured Mezzanine

Technology Hardware & Equipment

Technology Hardware &

Luxembourg Life FundAbsolute Return Fund I, 1L Term Loan

5 unchanged sentences

Pretium Partners LLC P1, Structured Mezzanine

PIK (5.3% Max

Pretium Partners LLC P2, Structured Mezzanine

PIK (7.5% Max

Sealane Trade Finance

5 unchanged sentences

Investment Portfolio (continued)

Interest Rate (b)

Equity/Other6.1%

34 unchanged sentences

Investment Portfolio (continued)

Below is selected balance sheet information for SCJV as of March 31, 2021 and

Below is selected balance sheet information for COPJV as of June 30, 2021 and

December 31, 2020:

5 unchanged sentences

Members equity

Below is selected statement of operations information for SCJV for the three months ended March 31,

2021 and 2020:

Three Months Ended

Below is selected statement of operations information for COPJV for the three and six months ended

June 30, 2021 and 2020:

Selected Statement of Operations Information

6 unchanged sentences

Net investment income

Net realized and unrealized losses

Net realized and unrealized gain (loss)

Net increase in net assets resulting from operations

Financial Instruments

The following is a summary of the fair value and location of the Companys derivative instruments in the consolidated balance sheets held as of March 31, 2021 and December 31, 2020:

The following is a summary of the fair value and location of the Companys derivative instruments in the consolidated balance sheets held as of June 30, 2021 and December 31, 2020:

Derivative Instrument

9 unchanged sentences

Net realized and unrealized gains and losses on derivative instruments recorded by the

Company for the three months ended March 31, 2021 and 2020 are in the following locations in the consolidated statements of operations:

Company for the six months ended June 30, 2021 and 2020 are in the following locations in the consolidated statements of operations:

Net Realized Gains (Losses)

Three Months Ended

Derivative Instrument

3 unchanged sentences

Net Unrealized Gains (Losses)

Three Months Ended

Derivative Instrument

5 unchanged sentences

These agreements include provisions to offset positions with the same counterparty in the event of default by one of

The Companys unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the condensed consolidated statements of assets and liabilities.

The following tables

present the Companys assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and

liabilities as of March 31, 2021 and December 31, 2020:

As of March 31, 2021

The Companys unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated balance sheets.

The following tables present the Companys assets

and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of June 30, 2021

and December 31, 2020:

As of June 30, 2021

Assets Subject to

12 unchanged sentences

As of December 31, 2020

Assets Subject

Assets Subject to

Master Netting

27 unchanged sentences

The Company utilizes cross currency swaps from time to time in order to hedge a portion of its investments in foreign currency.

The average notional balance for foreign currency forward contracts during the three months ended March 31, 2021 and 2020 was $65.0

and $27.9, respectively.

The average notional balance for foreign currency forward contracts during the six months ended June 30, 2021 and 2020 was $98.4 and

$28.3, respectively.

Fair Value of Financial Instruments

19 unchanged sentences

the fair value measurement.

As of March 31, 2021 and December 31, 2020, the Companys investments were

As of June 30, 2021 and December 31, 2020, the Companys investments were

categorized as follows in the fair value hierarchy:

March 31, 2021

June 30, 2021

Valuation Inputs

8 unchanged sentences

In addition, the Company had foreign currency forward contracts, as described in Note 7, which were categorized as Level 2 in the

fair value hierarchy as of March 31, 2021 and December 31, 2020.

fair value hierarchy as of June 30, 2021 and December 31, 2020.

The Companys investments consist primarily of

23 unchanged sentences

committee, and the board of directors reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Companys valuation policy.

The following is a reconciliation for the three months ended March 31, 2021 and 2020 of investments for which significant

unobservable inputs (Level 3) were used in determining fair value:

For the Three Months Ended March 31, 2021

The following is a reconciliation for the six months ended June 30, 2021 and 2020 of investments for which significant unobservable

inputs (Level 3) were used in determining fair value:

For the Six Months Ended June 30, 2021

Fair value at beginning of period

8 unchanged sentences

gains or losses relating to investments still held at the reporting date

For the Three Months Ended March 31, 2020

For the Six Months Ended June 30, 2020

Fair value at beginning of period

14 unchanged sentences

The valuation techniques and significant unobservable inputs used in recurring

Level 3 fair value measurements as of March 31, 2021 and December 31, 2020 were as follows:

Level 3 fair value measurements as of June 30, 2021 and December 31, 2020 were as follows:

Type of Investment

March 31, 2021

Fair Value at

Technique (1)

19 unchanged sentences

4.2% - 15.9% (10.1%)

Indicative Dealer

1.2% - 34.9% (33.9%)

EBITDA Multiple

1 unchanged sentence

Option Pricing Model

Equity Illiquidity Discount

Equity Illiquidity

30.0% - 30.0% (30.0%)

Discounted Cash Flow

Discount Rate

38 unchanged sentences

Prior to June 14, 2019, in accordance with the 1940 Act, the Company was allowed to borrow amounts such that its asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such

Effective June 15, 2019, the Companys asset coverage requirement applicable to senior securities was reduced from 200% to 150%.

As of March 31, 2021, the aggregate amount outstanding of the senior securities issued by

the Company was $3,633.

As of March 31, 2021, the Companys asset coverage was 189%.

The following tables

present summary information with respect to the Companys outstanding financing arrangements as of March 31, 2021 and December 31, 2020.

For additional information regarding these financing arrangements, see the notes to the

Effective June 15, 2019, the Companys

FS KKR Capital Corp.

2 unchanged sentences

Financing Arrangements (continued)

asset coverage requirement applicable to senior securities was reduced from 200% to 150%.

As of June 30, 2021, the aggregate amount outstanding of the senior securities issued by the

Company was $7,740.

As of June 30, 2021, the Companys asset coverage was 199%.

The following tables

present summary information with respect to the Companys outstanding financing arrangements as of June 30, 2021 and December 31, 2020.

For additional information regarding these financing arrangements, see the notes to the

Companys audited consolidated financial statements contained in its annual report on Form 10-K for the year ended December 31, 2020.

significant changes to the Companys financing arrangements during the three months ended March 31, 2021 are discussed below.

As of March 31,

Any significant changes to the Companys financing

arrangements during the six months ended June 30, 2021 are discussed below.

As of June 30,

Type of Arrangement

Maturity Date

Ambler Credit Facility (2)(8)

Revolving Credit Facility

November 22, 2024

Burholme Prime Brokerage Facility (2)(8)

Prime Brokerage Facility

September 26, 2021

CCT Tokyo Funding Credit Facility (2)

Revolving Credit Facility

December 2, 2023

L+1.75% - 2.00% (1)(3)

Darby Creek Credit Facility (2)(8)

Revolving Credit Facility

February 26, 2024

Dunlap Credit Facility (2)(8)

Revolving Credit Facility

February 26, 2024

Juniata River Credit Facility (2)(8)

Revolving Credit Facility

L+2.50% - L+2.75% (1)

July 15, 2022 - April 11, 2023

Meadowbrook Run Credit Facility (2)(8)

Revolving Credit Facility

November 22, 2024

Senior Secured Revolving Credit Facility (2)

15 unchanged sentences

Unsecured Notes

February 14, 2025

8.625% Notes due 2025 (6)

Unsecured Notes

3.400% Notes due 2026 (6)

Unsecured Notes

January 15, 2026

2.625% Notes due 2027 (6)

Unsecured Notes

January 15, 2027

CLO-1 Notes (2)(7)

Collateralized Loan Obligation

Collateralized Loan

L+1.85% - 3.01% (1)

January 15, 2031

7 unchanged sentences

converted to U.S.

dollars at an exchange rate of 1.00 to $1.17 as of March 31, 2021 to reflect total amount outstanding in U.S.

dollars at an exchange rate of 1.00 to $1.19 as of June 30, 2021 to reflect total amount outstanding in U.S.

Canadian dollar balance outstanding of CAD30 has been converted to U.S dollars at an exchange rate of

CAD1.00 to $0.80 as of March 31, 2021 to reflect total amount outstanding in U.S.

Pounds sterling balance outstanding of £110 has been converted to U.S dollars at an exchange rate of £1.00 to $1.38 as of March 31, 2021

CAD1.00 to $0.81 as of June 30, 2021 to reflect total amount outstanding in U.S.

Pounds sterling balance outstanding of £207 has been converted to U.S dollars at an exchange rate of £1.00 to $1.38 as of June 30, 2021

to reflect total amount outstanding in U.S.

Australian dollar balance outstanding of AUD6 has been converted to U.S dollars at an exchange rate of AUD1.00 to $0.76 as of March 31, 2021 to reflect total amount outstanding in U.S.

As of March 31, 2021, the fair value of the 4.750% notes, the 5.000% notes, the 4.625% notes, the 4.125% notes, the 8.625% notes and the

3.400% notes was approximately $466, $245, $425, $484, $282 and $993, respectively.

Australian dollar balance outstanding of AUD152 has been converted to U.S dollars at an exchange rate of AUD1.00 to $0.75 as of June 30, 2021 to reflect total amount outstanding in U.S.

As of June 30, 2021, the fair value of the 4.750% notes, the 5.000% notes, the 4.625% notes, the 4.125% notes, the 4.250% notes, the

8.625% notes, the 3.400% notes and the 2.625% notes was approximately $463, $245, $432, $500, $500, $282, $1,035 and $397, respectively.

These valuations are considered Level 2 valuations within the fair value hierarchy.

As of March 31, 2021, there were $281.4 of Class A-1R notes outstanding at L+1.85%, $20.5 of

Class A-2R notes outstanding at L+2.25%, $32.4 of Class B-1R notes outstanding at L+2.60% and $17.4 of Class B-2R

notes outstanding at 3.011%.

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Financing Arrangements (continued)

As of June 30, 2021, there were $281.4 of Class A-1R notes outstanding at L+1.85%, $20.5 of Class A-2R notes outstanding at L+2.25%, $32.4 of Class B-1R notes outstanding at L+2.60% and $17.4 of Class B-2R notes

outstanding at 3.011%.

As of June 16, 2021, the Company assumed all of FSKRs obligations under its credit facilities, and FSKRs wholly-owned special

purpose financing subsidiaries became wholly-owned special purpose financing subsidiaries of the Company, in each case, as a result of the consummation of the 2021 Merger.

As of December 31, 2020

7 unchanged sentences

Revolving Credit Facility

L+1.75% - 2.00% (1)(4)

December 23, 2025

16 unchanged sentences

CLO-1 Notes (2)(7)

Collateralized Loan Obligation

Collateralized Loan

L+1.85% - 3.01% (1)

January 15, 2031

LIBOR is subject to a 0% floor.

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Financing Arrangements (continued)

The carrying amount outstanding under the facility approximates its fair value.

16 unchanged sentences

As of December 31, 2020, there were $281.4 of Class A-1R notes outstanding at L+1.85%, $20.5

of Class A-2R notes outstanding at L+2.25%, $32.4 of Class B-1R notes outstanding at L+2.60% and $17.4 of Class B-2R notes outstanding at 3.011%.

For the three months ended March 31, 2021 and 2020, the components of total interest expense for the Companys financing

arrangements were as follows:

Three Months Ended March 31,

of Class A-2R notes outstanding at L+2.25%, $32.4 of Class B-1R notes outstanding at L+2.60% and $17.4 of

Class B-2R notes outstanding at 3.011%.

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Financing Arrangements (continued)

For the three and six months ended June 30, 2021 and 2020, the components of total

interest expense for the Companys financing arrangements were as follows:

Three Months Ended June 30,

Arrangement (1)

5 unchanged sentences

Total Interest

Ambler Credit Facility (2)

Burholme Prime Brokerage Facility (2)

CCT Tokyo Funding Credit Facility (2)

Darby Creek Credit Facility (2)

Dunlap Credit Facility (2)

Juniata River Credit Facility (2)

Locust Street Credit Facility (2)

Meadowbrook Run Credit Facility (2)

Senior Secured Revolving Credit Facility (2)

5 unchanged sentences

8.625% Notes due 2025

3.400% Notes due 2026

2.625% Notes due 2027

Six Months Ended June 30,

Arrangement (1)

Amortization of

Financing Costs

Total Interest

Amortization of

Financing Costs

Total Interest

Ambler Credit Facility (2)

Burholme Prime Brokerage Facility (2)

CCT Tokyo Funding Credit Facility (2)

Darby Creek Credit Facility (2)

Dunlap Credit Facility (2)

Juniata River Credit Facility (2)

Locust Street Funding Credit Facility (2)

Meadowbrook Run Credit Facility (2)

Senior Secured Revolving Credit Facility (2)

4.750% Notes due 2022

5.000% Notes due 2022

4.625% Notes due 2024

4.125% Notes due 2025

4.250% Notes due 2025

8.625% Notes due 2025

3.400% Notes due 2026

2.625% Notes due 2027

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Financing Arrangements (continued)

Borrowings of each of the Companys wholly-owned, special-purpose financing subsidiaries are considered borrowings of the Company for

2 unchanged sentences

The Companys average borrowings and weighted average interest rate, including the effect

of non-usage fees, for the three months ended March 31, 2021 were $4,041 and 3.88%, respectively.

As of March 31, 2021, the Companys weighted average effective interest rate on

of non-usage fees, for the six months ended June 30, 2021 were $4,213 and 3.88%, respectively.

As of June 30, 2021, the Companys weighted average effective interest rate on

borrowings, including the effect of non-usage fees, was 3.38%.

Companys average borrowings and weighted average interest rate, including the effect of non-usage fees, for the three months ended March 31, 2020 were $4,519 and 3.88%, respectively.

March 31, 2020, the Companys weighted average effective interest rate on borrowings, including the effect of non-usage fees, was 3.71%.

Companys average borrowings and weighted average interest rate, including the effect of non-usage fees, for the six months ended June 30, 2020 were $4,415 and 3.76%, respectively.

June 30, 2020, the Companys weighted average effective interest rate on borrowings, including the effect of non-usage fees, was 3.86%.

Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various

covenants, reporting requirements and other customary requirements for similar financing arrangements.

The Company was in compliance with all covenants required by its financing arrangements as of March 31, 2021 and December 31, 2020.

The Company was in compliance with all covenants required by its financing arrangements as of June 30, 2021 and December 31, 2020.

2.625% Notes due 2027

On June 17, 2021, the Company and U.S.

Bank National Association, or the Trustee entered into an Eighth Supplemental Indenture, or the Eighth Supplemental Indenture, to the Indenture, dated

July 14, 2014, between the Company and the Trustee, or the Base Indenture, and together with the Eighth Supplemental Indenture, the Indenture.

The Eighth Supplemental Indenture relates to the Companys issuance of $400 aggregate principal

amount of its 2.625% notes due 2027, or the 2.625% notes.

The Notes will mature on January 15, 2027 and may be redeemed

in whole or in part at the Companys option at any time or from time to time at the redemption prices set forth in the Indenture.

The Notes bear interest at a rate of 2.625% per year payable semi-annually on January 15th and July 15th of each

year, commencing on January 15, 2022.

The Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Companys existing and future indebtedness that is expressly subordinated in right of

payment to the Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Companys secured indebtedness (including unsecured indebtedness that

the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Companys subsidiaries, financing

vehicles or similar facilities.

The Indenture contains certain covenants, including covenants requiring the Company to comply

with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as amended, whether or not it is subject to those requirements, and to provide financial

information to the holders of the Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended.

These covenants are subject to important limitations and exceptions that

are described in the Indenture.

In addition, on the occurrence of a change of control repurchase event, as defined

in the Indenture, the Company will generally be required to make an offer to purchase the outstanding Notes at a price equal to 100% of the principal amount of such Notes plus accrued and unpaid interest to the repurchase date.

FSKR Credit Facilities

On June 16, 2021, as a result of the consummation of the 2021 Merger, the Company assumed all of FSKRs obligations under its Senior Secured Revolving Credit Facility, resulting in FSK remaining

the sole borrower thereunder, and the various wholly-owned special purpose financing subsidiaries of FSKR became wholly-owned special purpose financing subsidiaries of the Company.

Such special purpose financing subsidiaries and their outstanding

credit facilities are (a) Darby Creek LLC and the Darby Creek Credit Facility, (b) Dunlap Funding LLC and the Dunlap Credit Facility, (c) Juniata River LLC and the Juniata

FS KKR Capital Corp.

1 unchanged sentence

(in millions, except share and per share amounts)

Financing Arrangements (continued)

River Credit Facility, (d) Burholme Funding LLC and the Burholme Prime Brokerage Facility, (e) Ambler Funding LLC and the Ambler Credit Facility and (f) Meadowbrook Run LLC and the

Meadowbrook Run Credit Facility (such credit facilities, together with the prior obligations of FSKR under the Senior Secured Revolving Credit Facility, collectively, the FSKR Credit Facilities).

Information regarding the FSKR Credit

Facilities is set forth in Part IItem 1.

Financial StatementsNotes to Unaudited Consolidated Financial StatementsNote 9.

Financing Arrangements in FSKRs Quarterly Report on Form

10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 10, 2021.

Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions.

The Companys maximum exposure under these

arrangements is unknown;

however, the Company has not had prior claims or losses pursuant to these contracts.

The Companys maximum exposure under these arrangements is unknown;

however, the Company has not had prior

claims or losses pursuant to these contracts.

The Advisor has reviewed the Companys existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Companys knowledge, no material legal proceedings

are threatened against the Company.

From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Companys rights under contracts with

its portfolio companies.

While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Commitments and

Contingencies (continued)

Unfunded commitments to provide funds to portfolio companies are not recorded in the

Companys consolidated statements of assets and liabilities.

Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

The Company has sufficient liquidity

to fund these commitments.

As of March 31, 2021, the Companys unfunded commitments consisted of the following:

The Company is not currently subject to any material legal proceedings and, to the Companys knowledge, no material legal proceedings are threatened against the Company.

From time to time, the

Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Companys rights under contracts with its portfolio companies.

While the outcome of these legal

proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

Unfunded commitments to provide funds to portfolio companies are not recorded in the Companys consolidated balance sheets.

these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

The Company has sufficient liquidity to fund these commitments.

As of June 30, 2021, the

Companys unfunded commitments consisted of the following:

Category / Company (1)

1 unchanged sentence

5 Arch Income Fund 2 LLC

A10 Capital LLC

Advanced Dermatology & Cosmetic Surgery

Advania Sverige AB

Apex Group Limited

Ardonagh Group Ltd

Aspect Software Inc

Arrotex Australia Group Pty Ltd

Corsearch Intermediate Inc

Dental Care Alliance Inc

4 unchanged sentences

Heniff Transportation Systems LLC

Higginbotham Insurance Agency Inc

Individual FoodService

1 unchanged sentence

Karman Space Inc

KBP Investments LLC

Kellermeyer Bergensons Services LLC

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Commitments and

Contingencies (continued)

Category / Company (1)

Lakeview Farms Inc

MB2 Dental Solutions LLC

Miami Beach Medical Group LLC

Monitronics International Inc

Motion Recruitment Partners LLC

New Era Technology Inc

Parata Systems

P2 Energy Solutions Inc.

5 unchanged sentences

Sweeping Corp of America Inc

Sweet Harvest Foods Management Co

Truck-Lite Co LLC

3 unchanged sentences

Home Partners JV 2, Structured Mezzanine

Opendoor Labs Inc, 2L Term Loan

Jet Edge International LLC, Term Loan

Luxembourg Life FundAbsolute Return Fund III, Term Loan

Toorak Capital Partners LLC, Structured Mezzanine

Unfunded Asset Based Finance/Other commitments

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Commitments and

Contingencies (continued)

May be commitments to one or more entities affiliated with the named company.

As of March 31, 2021, the Companys debt commitments are comprised of $48.1 revolving credit facilities and $203.9 delayed draw

As of June 30, 2021, the Companys debt commitments are comprised of $176.4 revolving credit facilities and $774.9 delayed draw

term loans, which generally are used for acquisitions or capital expenditures and are subject to certain performance tests.

1 unchanged sentence

Companys unfunded Asset Based Finance/Other commitments generally require certain conditions to be met or actual approval from the Advisor prior to funding.

As of March 31, 2021, the Company also has an unfunded commitment to provide $65.8 of capital to SCJV.

As of June 30, 2021, the Company also has an unfunded commitment to provide $350.2 of capital to COPJV.

The capital commitment can be satisfied with contributions of cash and/or

The capital commitments cannot be drawn without an affirmative vote by both the Companys and SCRSs representatives on SCJVs board of managers.

The capital commitments cannot be drawn without an affirmative vote by both the Companys and SCRSs representatives on COPJVs board of managers.

While the Company does not expect to fund all of its unfunded commitments, there can be no assurance that it will not be required to do so.

In the normal course of business, the Company may enter into guarantees on behalf of portfolio companies.

Under such arrangements, the

Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations.

The Company has no such guarantees outstanding at March 31, 2021 and December 31,

FS KKR Capital Corp.

1 unchanged sentence

(in millions, except share and per share amounts)

Commitments and

Contingencies (continued)

In the normal course of business, the Company may enter into guarantees on behalf of

portfolio companies.

Under such arrangements, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations.

The Company has no such guarantees outstanding

at June 30, 2021 and December 31, 2020.

Financial Highlights

The following is a schedule of financial highlights of the Company for the three months ended March 31, 2021 and the year ended

The following is a schedule of financial highlights of the Company for the six months ended June 30, 2021 and the year ended

December 31, 2020:

Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2021

December 31, 2020

6 unchanged sentences

Stockholder distributions (3)

Distributions from net investment income

Distributions from net realized gain on investments

Net decrease in net assets resulting from stockholder distributions

Capital share transactions

Issuance of common stock (4)

Repurchases of common stock (5)

Net increase (decrease) in net assets resulting from capital share transactions

Net asset value, end of period

Per share market value, end of period

Shares outstanding, end of period

Total return based on net asset value (6)

Total return based on market value (7)

Ratio/Supplemental Data:

Net assets, end of period

Ratio of net investment income to average net assets (8)

Ratio of total operating expenses to average net assets (8)

Ratio of net operating expenses to average net assets (8)

Portfolio turnover (9)

Total amount of senior securities outstanding, exclusive of treasury securities

Asset coverage per unit (10)

Per share data may be rounded in order to recompute the ending net asset value per share.

The per share data was derived by using the weighted average shares outstanding during the applicable period.

The per share data for distributions reflect the actual amount of distributions paid per share during the applicable period.

The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of

common stock pursuant to the DRP.

The issuance of common stock at a price that is greater than the net asset value per share results in an increase in net asset value per share.

Represents the incremental impact of the Companys share repurchase program by buying shares in the open market at a price lower than net

asset value per share.

The total return based on net asset value for each period presented was calculated by taking the net asset value per share as of the end of

the applicable period, adding the cash distributions per share that were declared during the period and dividing the total by the net asset value per share at the beginning of the period.

Total return based on net asset value does not consider the

effect of any sales commissions or

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Financial Highlights (continued)

charges that may be incurred in connection with the sale of shares of the Companys common stock.

The historical calculation of total return based on net asset value in the table should not

be considered a representation of the Companys future total return based on net asset value, which may be greater or less than the return shown in the table due to a number of factors, including the Companys ability or inability to make

investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Companys expenses, variations in and the timing of the recognition of realized and unrealized

gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions.

As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in

future periods.

The total return calculations set forth above represent the total return on the Companys investment portfolio during the applicable period and do not represent an actual return to stockholders.

The total return based on market value for each period presented was calculated based on the change in market price during the applicable

period, including the impact of distributions reinvested in accordance with the Companys DRP.

Total return based on market value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale

of shares of the Companys common stock.

The historical calculation of total return based on market value in the table should not be considered a representation of the Companys future total return based on market value, which may be

greater or less than the return shown in the table due to a number of factors, including the Companys ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities

the Company acquires, the level of the Companys expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets, general economic

conditions and fluctuations in per share market value.

As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods.

Weighted average net assets during the applicable period are used for this calculation.

Ratios for the three months ended March 31, 2021

are annualized.

Annualized ratios for the three months ended March 31, 2021 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2021.

The following is a schedule of supplemental ratios for the

three months ended March 31, 2021 and year ended December 31, 2020:

Three Months Ended

March 31, 2021

December 31, 2020

Ratio of subordinated income incentive fees to average net assets

Ratio of interest expense to average net assets

Ratio of excise taxes to average net assets

Portfolio turnover for the three months ended March 31, 2021 is not annualized.

Asset coverage per unit is the ratio of the carrying value of the Companys total consolidated assets, less liabilities and indebtedness

not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Pending Merger with FSKR

On November 23, 2020, the Company entered into the 2020 Merger Agreement with FSKR, Merger

Sub, Inc., and the Advisor.

The 2020 Merger Agreement provides that, subject to the conditions set forth in the 2020 Merger Agreement, Merger Sub will merge with and into FSKR, with FSKR continuing as the surviving company and as a wholly-owned

subsidiary of FSK, or the First Merger, and, immediately thereafter, FSKR will merge with and into FSK, with FSK continuing as the surviving company, or together with the First Merger, the 2021 Merger.

The board of directors of each Fund has

approved the 2021 Merger, with the participation throughout by, and the unanimous support of, its respective independent directors.

The parties to the 2020 Merger Agreement intend the 2021 Merger to be treated as a reorganization within

the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

In the 2021 Merger, each share of FSKR

common stock issued and outstanding immediately prior to the effective time of the First Merger will be converted into a number of shares of FSK common stock equal to an exchange ratio to be determined in connection with the closing of the 2021

Merger, or the Exchange Ratio.

The Exchange Ratio will equal the net asset value per share of FSKR common stock, respectively (determined no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021 Merger),

divided by the net asset value per share of FSK common stock (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021 Merger).

Holders of FSKR common stock may receive fractional

shares or cash in lieu of fractional shares, at the election of FSK.

FS KKR Capital Corp.

Notes to Unaudited Consolidated Financial Statements (continued)

(in millions, except share and per share amounts)

Pending Merger with

FSKR (continued)

The 2020 Merger Agreement contains representations, warranties and covenants, including,

among others, covenants relating to the operation of each of the Funds and FS/KKR Advisors businesses during the period prior to the closing of the 2021 Merger.

The Funds have agreed to convene and hold meetings of their respective

stockholders for the purpose of obtaining the required approvals of the Funds stockholders, respectively, and have agreed to recommend that their stockholders approve their respective proposals.

The 2020 Merger Agreement provides that the board of directors of each Fund may not solicit proposals relating to alternative

transactions, or, subject to certain exceptions, enter into discussions or negotiations or provide information in connection with any proposal for an alternative transaction.

However, each of the Funds may, subject to certain conditions, change its

recommendation to their respective stockholders, terminate the 2020 Merger Agreement and enter into an agreement with respect to a superior alternative proposal if the board of directors of such Fund determines in its reasonable good faith judgment,

after consultation with its outside legal counsel, that the failure to take such action would be reasonably likely to breach its standard of conduct under applicable law (taking into account any changes to the 2020 Merger Agreement proposed by the

Consummation of the 2021 Merger, which is currently anticipated to occur during the second or third quarter of

2021, is subject to certain closing conditions, including (1) requisite approvals of the Funds stockholders, (2) the absence of certain legal impediments to the consummation of the 2021 Merger, (3) effectiveness of the

registration statement on Form N-14, which includes a joint proxy statement of the Funds and a prospectus of FSK, or the Proxy Statement, (4) subject to certain exceptions, the accuracy of the

representations and warranties and compliance with the covenants of each party to the 2020 Merger Agreement and (5) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act

of 1976, as amended).

The 2020 Merger Agreement also contains certain termination rights in favor of each Fund including if

the 2021 Merger is not completed on or before November 23, 2021 or if the requisite approvals of the applicable Funds stockholders are not obtained.

The 2020 Merger Agreement also provides that, upon the termination of the 2020 Merger

Agreement under certain circumstances, a third party may be required to pay FSKR a termination fee of approximately $90.8, or a third party may be required to pay FSK a termination fee of approximately $126.2.

In connection with the 2021 Merger, the Company is seeking stockholder approval to amend the Companys investment advisory agreement

to (a) reduce FSKs income incentive fee rate from 20% to 17.5% and (b) remove the total return lookback provision applicable to the subordinated incentive fee on income.

The Advisor has also agreed to waive income incentive fees in

the amount of $15 per quarter for the first six full fiscal quarters of operations following the 2021 Merger for a total waiver of $90.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

(in millions, except share and per share amounts)

The information contained in this section should be read in conjunction with our 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 the Company refer to FS KKR Capital Corp.

and the Advisor refers to FS/KKR Advisor, LLC.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements

because they relate to future events or our future performance or financial condition.

The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

our future operating results;

our business prospects and the prospects of the companies in which we may invest, including our and their ability to achieve our respective objectives

as a result of the current COVID-19 pandemic;

the impact of the investments that we expect to make;

the ability of our portfolio companies to achieve their objectives;

our current and expected financings and investments;

receiving and maintaining corporate credit ratings and changes in the general interest rate environment;

the adequacy of our cash resources, financing sources and working capital;

the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

our contractual arrangements and relationships with third parties;

actual and potential conflicts of interest with the other funds in the Advisor, FS Investments, KKR Credit or any of their respective affiliates;

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

general economic and political trends and other external factors, including the current COVID-19 pandemic and

related disruptions caused thereby;

our use of financial leverage;

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

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

our ability to maintain our qualification as a RIC and as a BDC;

the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued

the effect of changes to tax legislation on us and the portfolio companies in which we may invest and our and their tax position;

the tax status of the enterprises in which we may invest;

the 2021 Merger, the likelihood the 2021 Merger is completed and the anticipated timing of their completion.

In addition, words such as anticipate, believe, expect and intend indicate a

forward-looking statement, although not all forward-looking statements include these words.

The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties.

actual results could differ materially from those implied or expressed in the forward-looking statements for any reason.

Factors that could cause actual results to differ materially include:

changes in the economy;

risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or

future changes in laws or regulations and conditions in our operating areas;

the price at which shares of our common stock may trade on the New York Stock Exchange, or NYSE.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on

information available to us on the date of this quarterly report on Form 10-Q.

Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements,

whether as a result of new information, future events or otherwise.

Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the SEC, including

annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

The forward-looking

statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, or the Securities

Act, and Section 21E of the Exchange Act.

We were incorporated under the general corporation laws of the State of Maryland on December 21, 2007 and formally commenced investment operations on January 2, 2009.

We are an externally

managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S.

federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code.

We are externally

managed by the Advisor pursuant to an investment advisory agreement, or the investment advisory agreement, and supervised by our board of directors, a majority of whom are independent.

Our investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation.

We seek to meet our

investment objectives by:

utilizing the experience and expertise of the management team of the Advisor;

employing a defensive investment approach focused on long-term credit performance and principal protection;

focusing primarily on debt investments in a broad array of private U.S.

companies, including middle-market companies, which we define as companies with

annual EBITDA of $25 million to $100 million at the time of investment;

investing primarily in established, stable enterprises with positive cash flows;

maintaining rigorous portfolio monitoring in an attempt to anticipate and pre-empt negative credit events

within our portfolio, such as an event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.

We pursue our investment objective by investing primarily in the debt of middle market U.S.

companies with a focus on originated transactions sourced through the network of the Advisor and its affiliates.

We define direct originations as any investment where the Companys investment adviser, sub-adviser or their affiliates had negotiated the terms of the transaction beyond just the price, which, for

example, may include negotiating financial covenants, maturity dates or interest rate terms.

These directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as

an intermediary, for a closely held club, or similar transactions.

These direct originations include investments originated by our former investment adviser, our former investment sub-adviser or their

Our portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of

private middle market U.S.

companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S.

Although we do not expect a significant portion of our portfolio to be comprised of subordinated

loans, there is no limit on the amount of such loans in which we may invest.

We may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the over-the-counter market or directly from our target companies as primary market or directly originated investments.

In connection with our debt investments, we may

on occasion receive equity interests such as warrants or options as additional consideration.

We may also purchase or otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants

that may be converted into or exchanged for common stock or other equity or the cash value of common stock or other equity, including through a co-investment with a financial sponsor or possibly the

restructuring of an investment.

In addition, a portion of our portfolio may be comprised of corporate bonds, structured products, other debt securities and derivatives, including total

return swaps and credit default swaps.

The Advisor will seek to tailor our investment focus as market conditions evolve.

Depending on market conditions, we may increase or decrease our exposure

to less senior portions of the capital structures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of loans, bonds or other securities reflects a lower value than deemed warranted by the

Advisors fundamental analysis.

Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor with the broader investment community

and may include event driven investments, anchor orders and structured products.

The senior secured loans, second lien secured

loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally have stated terms of up to ten years, but the expected average life of such securities is

generally three to four years.

However, we may invest in loans and securities with any maturity or duration.

Our debt investments may be rated by a NRSRO and, in such case, generally will carry a rating below investment grade (rated lower than

Baa3 by Moodys or lower than BBB- by S&P).

We may invest without limit in debt or other securities of any rating, as well as debt or other securities that have not been rated

Pending Merger with FSKR

On November 23, 2020, we entered into an Agreement and Plan of Merger, or the 2020 Merger Agreement with FS KKR Capital Corp II., a Maryland corporation, or FSKR, and together with FSK, the Funds,

Rocky Merger Sub, Inc., a Maryland corporation and wholly-owned subsidiary of FSK, or Merger Sub and the Advisor.

Merger Agreement provides that, subject to the conditions set forth in the 2020 Merger Agreement, Merger Sub will merge with and into FSKR, with FSKR continuing as the surviving company and as a wholly-owned subsidiary of FSK, or the First Merger,

and, immediately thereafter, FSKR will merge with and into the Company, with the Company continuing as the surviving company, or together with the First Merger, the 2021 Merger.

The board of directors of each Fund has approved the 2021 Merger, with

the participation throughout by, and the unanimous support of, its respective independent directors.

The parties to the 2020 Merger Agreement intend the 2021 Merger to be treated as a reorganization within the meaning of

Section 368(a) of the Internal Revenue Code of 1986, as amended.

In the 2021 Merger, each share of FSKRs common

stock issued and outstanding immediately prior to the effective time of the First Merger will be converted into a number of shares of the Companys common stock equal to an exchange ratio to be determined in connection with the closing of the

2021 Merger, or the Exchange Ratio.

The Exchange Ratio will equal the net asset value per share of FSKRs common stock, respectively (determined no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021

Merger), divided by the net asset value per share of the Companys common stock (determined, in each case, no earlier than 48 hours (excluding Sundays and holidays) prior to the closing date of the 2021 Merger).

Holders of the FSKRs

common stock may receive fractional shares or cash in lieu of fractional shares, at the election of the Company.

Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of the Funds and the Advisors businesses during the period prior to the closing of the 2021 Merger.

Funds have agreed to convene and hold meetings of their respective stockholders for the purpose of obtaining the required approvals of the Funds stockholders, respectively, and have agreed to recommend that their stockholders approve their

respective proposals.

The 2020 Merger Agreement provides that the board of directors of each Fund may not solicit proposals

relating to alternative transactions, or, subject to certain exceptions, enter into discussions or negotiations or provide information in connection with any proposal for an alternative transaction.

However, each of the Funds may, subject to certain

conditions, change its recommendation to their respective stockholders, terminate the 2020 Merger Agreement and enter into an agreement with respect to a superior alternative proposal if the board of directors of such Fund determines in its

reasonable good faith judgment, after consultation with its outside legal counsel, that the failure to take such action would be reasonably likely to breach its standard of conduct under applicable law (taking into account any changes to the 2020

Merger Agreement proposed by the other Fund).

Consummation of the 2021 Merger, which is currently anticipated to occur during

the second or third quarter of 2021, is subject to certain closing conditions, including (1) requisite approvals of the Funds stockholders, (2) the absence of certain legal impediments to the consummation of the 2021 Merger,

(3) effectiveness of the registration statement on Form N-14, which includes a joint proxy statement of the Funds and a prospectus of the Company, or the Proxy Statement, (4) subject to certain

exceptions, the accuracy of the representations and warranties and compliance with the covenants of each party to the 2020

Merger Agreement and (5) required regulatory approvals (including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended).

The 2020 Merger Agreement also contains certain termination rights in favor of each Fund including if the 2021 Merger is not completed on

or before November 23, 2021 or if the requisite approvals of the applicable Funds stockholders are not obtained.

The 2020 Merger Agreement also provides that, upon the termination of the 2020 Merger Agreement under certain circumstances,

a third party may be required to pay FSKR a termination fee of approximately $90.8, or a third party may be required to pay FSK a termination fee of approximately $126.2.

In connection with the 2021 Merger, the Company is seeking stockholder approval to amend the Companys investment advisory agreement to (a) reduce FSKs income incentive fee rate from 20%

to 17.5% and (b) remove the total return lookback provision applicable to the subordinated incentive fee on income.

The Advisor has also agreed to waive income incentive fees in the amount of $15 per quarter for the first six full fiscal

quarters of operations following the 2021 Merger for a total waiver of $90.

The principal measure of our financial performance is net increase in net assets resulting from operations, which includes net investment

income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation or depreciation on investments and net unrealized gain or loss on foreign currency.

Net investment income is the difference

between our income from interest, dividends, fees and other investment income and our operating and other expenses.

Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments

and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions.

Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to

foreign currency fluctuations.

Net unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign

denominated investments.

Net unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.

We principally generate revenues in the form of interest income on the debt investments we hold.

In addition, we generate revenues in the

form of non-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees.

may also generate revenues in the form of dividends and other distributions on the equity or other securities we hold.

Our primary operating expenses include the payment of management and incentive fees and other expenses under the

investment advisory agreement and the administration agreement, interest expense from financing arrangements and other indebtedness, and other expenses necessary for our operations.

The management and incentive fees compensate the Advisor for its

work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

The Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs

activities, and other administrative services.

The Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required

to maintain and preparing reports for our stockholders and reports filed with the SEC.

In addition, the Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of

reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

Pursuant to the administration agreement, we reimburse the Advisor for expenses necessary to perform services related to our administration and operations, including the Advisors allocable portion

of the compensation and related expenses of certain personnel of FS Investments and KKR Credit providing administrative services to us on behalf of the Advisor.

We reimburse the Advisor no less than quarterly for all costs and expenses incurred by

the Advisor in performing its obligations and providing personnel and facilities under the administration agreement.

The Advisor allocates the cost of such services to us based on factors such as total assets, revenues, time allocations and/or other

reasonable metrics.

Our board of directors reviews the methodology employed in determining how the expenses are allocated to us and the proposed allocation of administrative expenses among us and certain affiliates of the Advisor.

directors then assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service

providers known to be available.

In addition, our board of directors considers whether

any single third-party service provider would be capable of providing all such services at comparable cost and quality.

Finally, our board of directors compares the total amount paid to the

Advisor for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs.

all other expenses of our operations and transactions, including all other expenses incurred by the Advisor in performing services for us and administrative personnel paid by the Advisor, to the extent they are not controlling persons of the Advisor

or any of its affiliates, subject to the limitations included in the investment advisory agreement and the administration agreement.

In addition, we have contracted with State Street Bank and Trust Company to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial

information for review by the Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

COVID-19 Developments

The rapid spread of the COVID-19 pandemic, and associated impacts on the U.S.

and global economies, has negatively impacted, and is likely to continue to negatively

impact, the business operations of some of our portfolio companies.

We cannot at this time fully predict the continued impact of COVID-19 on our business or the business of our portfolio companies, its

duration or magnitude or the extent to which it will negatively impact our portfolio companies operating results or our own results of operations or financial condition.

We expect that certain of our portfolio companies may continue to

experience economic distress for the foreseeable future and may significantly limit business operations if subjected to prolonged economic distress.

These developments could result in a decrease in the value of our investments.

COVID-19 has already had adverse effects on our investment income and we expect that such adverse

effects may continue for some time.

These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments.

In addition, disruptions

in the capital markets have resulted in illiquidity in certain market areas.

These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows.

economic conditions caused by COVID-19 can also be expected to increase our funding costs and limit our access to the capital markets.

These events have limited our investment originations, which is likely to

continue for the immediate future, and have also had a material negative impact on our operating results.

We will continue to

carefully monitor the impact of the COVID-19 pandemic on our business and the business of our portfolio companies.

Because the full effects of the COVID-19 pandemic are

not capable of being known at this time, we cannot estimate the impacts of COVID-19 on our future financial condition, results of operations or cash flows.

We do, however, expect that it may continue to have a

negative impact on our business and the financial condition of certain of our portfolio companies.

Portfolio Investment Activity for the

Three Months Ended March 31, 2021 and for the Year Ended December 31, 2020

Total Portfolio Activity

The following tables present certain selected information regarding our portfolio investment activity for the three months ended

March 31, 2021 and the year ended December 31, 2020:

Net Investment Activity

For the Three Months Ended

March 31, 2021

For the Year Ended

December 31, 2020

Sales and Repayments

Net Portfolio Activity

For the Three Months Ended March 31, 2021

New Investment Activity by Asset Class

Senior Secured LoansFirst Lien

Senior Secured LoansSecond Lien

Other Senior Secured Debt

Subordinated Debt

Asset Based Finance

Strategic Credit Opportunities Partners, LLC

The following table summarizes the composition of our investment portfolio at cost and fair value as of

March 31, 2021 and December 31, 2020:

December 31, 2020

Senior Secured LoansFirst Lien

Senior Secured LoansSecond Lien

Other Senior Secured Debt

Subordinated Debt

Asset Based Finance

Strategic Credit Opportunities Partners, LLC

Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on

The following table presents certain selected information regarding the composition of our

investment portfolio as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

Number of Portfolio Companies

% Variable Rate Debt Investments (based on fair value) (1)(2)

% Fixed Rate Debt Investments (based on fair value) (1)(2)

% Other Income Producing Investments (based on fair value) (3)

% Non-Income Producing Investments (based on fair value) (2)

% of Investments on Non-Accrual (based on fair value)

Weighted Average Annual Yield on Accruing Debt Investments (2)(4)

Weighted Average Annual Yield on All Debt Investments (5)

Debt Investments means investments that pay or are expected to pay a stated interest rate, stated dividend rate or other similar

stated return.

Does not include investments on non-accrual status.

Other Income Producing Investments means investments that pay or are expected to pay interest, dividends or other income to the

Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return.

The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate,

dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S.

dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus

(b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment;

divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the

applicable reporting period.

The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate,

dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S.

dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or

premium of each Debt Investment;

divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

For the three months ended March 31, 2021, our total return based on net asset value was 6.43% and our total return based on market

value was 23.18%.

For the year ended December 31, 2020, our total return based on net asset value was (9.69)% and our total return based on market value was (19.73)%.

See footnotes 6 and 7 to the table included in Note 11 to our unaudited

consolidated financial statements included herein for information regarding the calculation of our total return based on net asset value and total return based on market value, respectively.

Direct Originations

The following table presents certain selected

information regarding our Direct Originations as of March 31, 2021 and December 31, 2020:

Characteristics of All Direct Originations held in Portfolio

March 31, 2021

December 31, 2020

Number of Portfolio Companies

% of Investments on Non-Accrual (based on fair value)

Total Cost of Direct Originations

Total Fair Value of Direct Originations

% of Total Investments, at Fair Value

Weighted Average Annual Yield on Accruing Debt Investments (1)

Weighted Average Annual Yield on All Debt Investments (2)

The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate,

dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S.

dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus

(b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment;

divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the

applicable reporting period.

Does not include Debt Investments on non-accrual status.

The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate,

dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S.

dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the

annual amortization of the purchase or original issue discount or premium of each Debt Investment;

divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period.

Portfolio Composition by Industry Classification

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio

assets in such industries as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

Industry Classification

Automobiles & Components

Capital Goods

Commercial & Professional Services

Consumer Durables & Apparel

Consumer Services

Diversified Financials

Food & Staples Retailing

Food, Beverage & Tobacco

Health Care Equipment & Services

Household & Personal Products

Media & Entertainment

Pharmaceuticals, Biotechnology & Life Sciences

Software & Services

Strategic Credit Opportunities Partners, LLC

Technology Hardware & Equipment

Telecommunication Services

Transportation

Portfolio Asset Quality

In addition to various risk management and monitoring tools, the Advisor uses an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio.

Advisor uses an investment rating scale of 1 to 4.

The following is a description of the conditions associated with each investment rating:

Summary Description

Performing investmentgenerally executing in accordance with plan and there are no concerns about the portfolio companys performance or ability to meet covenant

requirements.

Performing investmentno concern about repayment of both interest and our cost basis but companys recent performance or trends in the industry require closer

Underperforming investmentsome loss of interest or dividend possible, but still expecting a positive return on investment.

Underperforming investmentconcerns about the recoverability of principal or interest.

The following table shows the distribution of our investments on the 1 to 4 investment

rating scale at fair value as of March 31, 2021 and December 31, 2020:

March 31, 2021

December 31, 2020

Investment Rating

The amount of the portfolio in each grading category may vary substantially from period to period

resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities.

In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in

investment values.

Results of Operations

Comparison of the Three Months Ended March 31, 2021 and March 31, 2020

Our investment

income for the three months ended March 31, 2021 and 2020 was as follows:

Three Months Ended March 31,

Percentage of

Interest income

Paid-in-kind interest income

Dividend income

Total investment income (1)

Such revenues represent $131 and $160 of cash income earned as well as $20 and $19 in non-cash

portions relating to accretion of discount and PIK interest for the three months ended March 31, 2021 and 2020, respectively.

Cash flows related to such non-cash revenues may not occur for a number of

reporting periods or years after such revenues are recognized.

The level of interest income we receive is

generally related to the balance of income-producing investments, multiplied by the weighted average yield of our investments.

Fee income is transaction based, and typically consists of amendment and consent fees, prepayment fees, structuring fees

and other non-recurring fees.

As such, fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

The decrease in interest income during the three months ended March 31, 2021 compared to the three months ended March 31, 2020

can primarily be attributed to the repayment of higher yielding assets replaced by lower yielding assets, the impact of the decline in LIBOR on our floating rate investments and the impact of in non-accrual

assets during the past year.

A portion of each of these factors was impacted by the ongoing COVID-19 pandemic.

The increase in dividend income during the three months ended March 31, 2021 compared

to the three months ended March 31, 2020 can be primarily attributed to the increase in dividends paid in respect to our investment in Strategic Credit Opportunities Partners, LLC.

Our operating expenses for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

Management fees

Subordinated income incentive fees

Administrative services expenses

Accounting and administrative fees

Interest expense

Total operating expenses

The following table reflects selected expense ratios as a percent of average net assets for the three

months ended March 31, 2021 and 2020:

Three Months Ended

Ratio of operating expenses to average net assets

Ratio of incentive fees and interest expense to average net assets (1)

Ratio of net operating expenses, excluding certain expenses, to average net assets

Ratio data may be rounded in order to recompute the ending ratio of net operating expenses to average net assets or net operating expenses,

excluding certain expenses, to average net assets.

Incentive fees and interest expense, among other things,

may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in amounts outstanding under our financing arrangements and benchmark interest rates such as LIBOR, among other factors.

Net Investment Income

Our net investment income totaled $78 ($0.63 per share) and $98 ($0.78 per share) for the three months ended March 31, 2021 and 2020, respectively.

The decrease in net investment income during the

three months ended March 31, 2021 compared to the three months ended March 31, 2020 can primarily be attributed to lower investment income during the three months ended March 31, 2021 as discussed above, partially offset by lower

Net Realized Gains or Losses

Our net realized gains (losses) on investments and foreign currency for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

Net realized gain (loss) on investments (1)

Net realized gain (loss) on foreign currency

Total net realized gain (loss)

We sold investments and received principal repayments, respectively, of $248 and $629 during the three months ended March 31, 2021 and

$459 and $455 during the three months ended March 31, 2020.

Net Change in Unrealized Appreciation (Depreciation)

Our net change in unrealized appreciation (depreciation) on investments and unrealized gain (loss) on foreign currency for the three

months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

Net change in unrealized appreciation (depreciation) on investments

Net change in unrealized appreciation (depreciation) on foreign currency forward contracts

Net change in unrealized gain (loss) on foreign currency

Total net change in unrealized appreciation (depreciation)

The net change in unrealized appreciation (depreciation) during the three months ended March 31, 2021

was driven primarily by continued mark to market improvements in the portfolio since the bottom of the COVID-19 pandemic as well as the reversal of unrealized losses that were sole or repaid during the quarter and converted to realized losses.

net change in unrealized appreciation (depreciation) during the three months ended March 31, 2020 was driven primarily by mark to market declines across the portfolio resulting from uncertainty related to the current COVID-19 pandemic.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended March 31, 2021, the net increase in net assets resulting from operations was $199 ($1.61 per share)

compared to a net decrease in net assets resulting from operations of $703 ($5.59 per share) during the three months ended March 31, 2020.

This Results of Operations section should be read in conjunction with COVID-19 Developments above.

Financial Condition, Liquidity and Capital Resources

As of March 31, 2021, we had $149 in cash and foreign

currency, which we or our wholly-owned financing subsidiaries held in custodial accounts, and $1,449 in borrowings available under our financing arrangements, subject to borrowing base and other limitations.

As of March 31, 2021, we also held

broadly syndicated investments and opportunistic investments that we believe could be sold to create additional liquidity.

As of March 31, 2021, we had unfunded debt investments with aggregate unfunded commitments of $252.0, unfunded

equity/other commitments of $205.7 and unfunded commitments of $65.8 of Strategic Credit Opportunities Partners, LLC.

We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need

We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments, as

well as principal repayments and proceeds from sales of our investments.

To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of the Advisor, but in no event will leverage employed exceed the

maximum amount permitted by the 1940 Act.

Prior to June 14, 2019, in accordance with the 1940 Act, we were allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, was at least 200% after such borrowing.

Effective June 15, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%.

As of March 31, 2021, the aggregate amount outstanding of the senior securities issued by us was $3.6 billion.

As of March 31, 2021, our asset coverage was 189%.

See Financing Arrangements.

investing in securities of portfolio companies, we invest the cash received from fees, interest and dividends earned from our investments and principal repayments and proceeds from sales of our investments primarily in cash, cash equivalents,

including money market funds, U.S.

government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

This Financial Condition, Liquidity and Capital Resources section should be read in conjunction with COVID-19 Developments above.

Financing Arrangements

The following table presents summary information with respect to our outstanding financing arrangements as of March 31, 2021:

As of March 31, 2021

Type of Arrangement

Maturity Date

CCT Tokyo Funding Credit Facility (2)

Revolving Credit Facility

L+1.75% - 2.00% (1)(3)

December 2, 2023

Senior Secured Revolving Credit Facility (2)

Revolving Credit Facility

December 23, 2025

4.750% Notes due 2022 (6)

Unsecured Notes

5.000% Notes due 2022 (6)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements