What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2020-11-19 compared with 2019-11-20 · 112 added, 22 removed, 113 unchanged (54% of the section changed)

2 unchanged sentences

Our common stock trades on the Nasdaq Global Select Market under the symbol "OCSL." The following table sets forth, for each fiscal quarter during the last two most recently completed fiscal years and for the current fiscal year, the range of high and low sales prices of our common stock as reported on the Nasdaq Global Select Market, the premium (discount) of sales price to our net asset value, or NAV, and the distributions declared by us for each fiscal quarter.

Premium (Discount) of High Sales Price to NAV (2)

Premium (Discount) of Low Sales Price to NAV (2)

Cash Distribution per Share (3)

NAV (1) High Low Premium (Discount) of High Sales Price to NAV (2) Premium (Discount) of Low Sales Price to NAV (2) Cash Distribution per Share (3)

Year ended September 30, 2019

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(2) Calculated as the respective high or low sales price less NAV, divided by NAV.

Represents the distribution paid or to be paid in the specified quarter.

(3) Represents the distribution declared in the specified quarter.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders.

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Stock Performance Graph

The following graph compares the cumulative 5-year total return provided to shareholders on Oaktree Specialty Lending Corporation’s common stock relative to the cumulative total returns of the Standard & Poor’s 500 Index and the Russell 2000 Financial Services Index.

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each index on September 30, 2015 and its relative performance is tracked through September 30, 2020.

The stock performance graph shows returns during management by the Former Adviser for the periods from September 30, 2014 through October 16, 2017 and during management by Oaktree for the period from October 17, 2017 through September 30, 2019 .

September 30, 2014

September 30, 2015

September 30, 2016

September 30, 2017

September 30, 2018

September 30, 2019

The stock performance graph shows returns during management by the Former Adviser for the periods from September 30, 2015 through October 16, 2017 and during management by Oaktree and its affiliates for the period from October 17, 2017 through September 30, 2020.

September 30, 2015 September 30, 2016 September 30, 2017 September 30, 2018 September 30, 2019 September 30, 2020

Oaktree Specialty Lending Corporation 100.00 107.43 110.46 108.94 122.66 124.64

S&P 500 100.00 115.43 136.91 161.43 168.30 193.80

Russell 2000 Financial Services 100.00 115.91 141.96 151.60 149.55 115.08

Wells Fargo BDC Total Return Index 100.00 121.53 133.53 137.98 148.03 114.90

Stock Repurchase Program

We did not repurchase shares of our common stock during the year ended September 30, 2019 and 2018.

We did not repurchase shares of our common stock during the years ended September 30, 2020 and 2019.

Fee and Expenses

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Offering expenses (as a percentage of offering price) —% (2)

Dividend reinvestment plan fees

Dividend reinvestment plan fees Up to $15 (3)

Total stockholder transaction expenses (as a percentage of offering price) —% (4)

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Other expenses 0.78% (8)

Acquired fund fees and expenses 0.96% (9)

Total annual expenses 8.61% (10)

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(2) In the event that we conduct an offering of our securities, a corresponding prospectus supplement will disclose the estimated offering expenses.

The expenses of administering our dividend reinvestment plan are included in “Other expenses.”

(3) The expenses of administering our dividend reinvestment plan are included in “Other expenses.” The plan administrator’s fees under the plan are paid by us.

If a participant elects by notice to the plan administrator in advance of termination to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a transaction fee of up to $15 plus a $0.10 per share fee from the proceeds.

(4) Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any.

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For purposes of this table, we have assumed $1.6 billion of total gross assets (excluding cash and cash equivalents), which was the actual amount of our total gross assets as of September 30, 2020.

Business - Investment Advisory and Management Agreement - Management Fee” for additional information.

Business - Investment Advisory and Management Agreement - Management Fee” and “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Management Fee Waiver.

(6) The incentive fee consists of two parts.

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Business - Investment Advisory and Management Agreement - Management Fee” for additional information.

Under the Investment Advisory Agreement, the second part of the incentive fee (the “capital gains incentive fee”) is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date) commencing with the fiscal year ended September 30, 2019 and equals 17.5% of our realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees under the Investment Advisory Agreement.

our realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees under the Investment Advisory Agreement.

Any realized capital gains or losses and unrealized capital depreciation with respect to our portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the calculations of the second part of the incentive fee.

For the two-year period commencing on October 17, 2017, the Adviser agreed to waive, to the extent necessary, any management or incentive fees payable to the Adviser that exceed what would have been paid to the Former Adviser in

the aggregate under the Former Investment Advisory Agreement.

For illustrative purposes, however, the table above assumes that no management or incentive fees payable to the Adviser were waived by the Adviser pursuant to this waiver.

For the two-year period commencing on October 17, 2017, OCM agreed to waive, to the extent necessary, any management or incentive fees payable to OCM that exceed what would have been paid to the Former Adviser in the aggregate under the Former Investment Advisory Agreement.

For illustrative purposes, however, the table above assumes that no management or incentive fees payable to OCM were waived by OCM pursuant to this waiver.

The incentive fee referenced in the table above is based on actual amounts of the incentive fee on income incurred during the year ended September 30, 2020 and the capital gains incentive fee payable under the Investment Advisory Agreement as of September 30, 2020.

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These expenses include certain expenses allocated to us under the Investment Advisory Agreement, including travel expenses incurred by the Adviser’s personnel in connection with investigating and monitoring our investments, such as investment due diligence.

(9) Our stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be an investment company under section 3(a) of the Investment Company Act but for the exceptions to that definition provided for in sections 3(c)(1) and 3(c)(7) of the Investment Company Act ("Acquired Funds") in which we invest.

This amount includes the annual expenses of SLF JV I.

There are no fees paid by SLF JV I to the Adviser.

See "Management Discussion and Analysis - Senior Loan Fund I LLC" and Note 3 to our Consolidated Financial Statements in this Form 10-K for more information on SLF JV I.

The annual expenses of SLF JV I include interest payments on the subordinated notes held by Kemper, which represented 13.0% of such expenses, and exclude interest payments on the subordinated notes held by us.

(10) “Total annual expenses” is presented as a percentage of net assets attributable to common stockholders because our common stockholders bear all of our fees and expenses and includes all fees and expenses of our consolidated subsidiaries.

“Total annual expenses” does not reflect any potential provision (benefit) for income taxes because of the uncertainties associated with determining such amounts in future periods.

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock assuming that we hold no cash or liabilities other than debt.

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The example does not include any sales load or offering expenses.

An investor would pay the following expenses on a $1,000 investment

An investor would pay the following expenses on a $1,000 investment 1 Year 3 Years 5 Years 10 Years

Assuming a 5% annual return (assumes no return from net realized capital gains) $ 70 $ 211 $ 356 $ 729

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If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger a greater incentive fee, our expenses, and returns to our investors, would be higher.

In addition, while the example assumes reinvestment of all distributions at NAV, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the cash distribution payable to a participant by either (i) the greater of (a) the current NAV per share of our common stock and (b) 95% of the market price per share of our common stock at the close of trading on the payment date fixed by our Board of Directors in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased by the administrator of the dividend reinvestment plan in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below NAV.

For purposes of this example, we have assumed that as of October 1, 2020, the sum of our realized capital losses and unrealized capital depreciation on a cumulative basis since October 1, 2018 equaled zero.

total dollar amount of the cash distribution payable to a participant by either (i) the greater of (a) the current NAV per share of our common stock and (b) 95% of the market price per share of our common stock at the close of trading on the payment date fixed by our Board of Directors in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased by the administrator of the dividend reinvestment plan in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below NAV.

Financial Highlights

(Share amounts in thousands) Year ended

September 30,

2020 Year ended

September 30,

2019 Year ended

September 30,

2018 (1) Year ended

September 30,

2017 Year ended

September 30,

Net asset value per share at beginning of period $6.60 $6.09 $6.16 $7.97 $9.00

Net investment income (2) 0.51 0.48 0.43 0.51 0.72

Net unrealized appreciation (depreciation) (2) (0.14) 0.27 0.73 (0.69) (0.33)

Net realized gains (losses) (2) (0.10) 0.14 (0.83) (1.21) (0.84)

Provision for income tax (expense) benefit (2) 0.01 — — — —

Distributions of net investment income to stockholders (0.39) (0.38) (0.27) (0.47) (0.67)

Tax return of capital — — (0.13) — (0.05)

Net issuance/repurchases of common stock — — — 0.05 0.14

Net asset value per share at end of period $6.49 $6.60 $6.09 $6.16 $7.97

Per share market value at beginning of period $5.18 $4.96 $5.47 $5.81 $6.17

Per share market value at end of period $4.84 $5.18 $4.96 $5.47 $5.81

Total return (3) 2.10% 12.56% (1.49)% 2.84% 7.02%

Common shares outstanding at beginning of period 140,961 140,961 140,961 143,259 150,263

Common shares outstanding at end of period 140,961 140,961 140,961 140,961 143,259

Net assets at beginning of period $930,630 $858,035 $867,657 $1,142,288 $1,353,094

Net assets at end of period $914,879 $930,630 $858,035 $867,657 $1,142,288

Average net assets (4) $871,305 $909,264 $841,583 $1,018,498 $1,229,639

Ratio of net investment income to average net assets 8.26% 7.47% 7.13% 7.13% 8.68%

Ratio of total expenses to average net assets 7.57% 9.65% 9.51% 10.49% 13.09%

Ratio of net expenses to average net assets 8.16% 8.78% 9.35% 10.35% 11.48%

Ratio of portfolio turnover to average investments at fair value 38.99% 32.50% 67.66% 39.06% 23.39%

Weighted average outstanding debt (5) $647,080 $573,891 $608,553 $982,372 $1,190,105

Average debt per share (2) $4.59 $4.07 $4.32 $6.95 $8.07

Asset coverage ratio at end of period (6) 227.22% 294.91% 232.98% 227.40% 220.84%

(1) Beginning on October 17, 2017, the Company is externally managed by Oaktree or its affiliates.

Prior to October 17, 2017, the Company was externally managed by the Former Adviser.

(2) Calculated based upon weighted average shares outstanding for the period.

(3) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP.

Total return does not include sales load.

(4) Calculated based upon the weighted average net assets for the period.

(5) Calculated based upon the weighted average of debt outstanding for the period.

(6) Based on outstanding senior securities of $714.8 million, $476.1 million, $643.4 million, $680.7 million and $946.5 million as of September 30, 2020, 2019, 2018, 2017 and 2016, respectively.

September 30,

2015 Year Ended

September 30,

2014 Year Ended

September 30,

2013 Year Ended

September 30,

2012 Year Ended

September 30,

Net asset value at beginning of period $9.64 $9.85 $9.92 $10.07 $10.43

Net investment income (4) 0.75 1.00 1.04 1.11 1.05

Net unrealized appreciation (depreciation) on investments and secured borrowings (4) (0.46) (0.23) 0.12 0.70 (0.10)

Net realized gain (loss) on investments, interest rate swap and secured borrowings (4) (0.19) 0.02 (0.24) (0.81) (0.47)

Distributions of net investment income to stockholders (4) (0.79) (0.94) (0.90) (1.04) (1.20)

Tax return of capital (4) — (0.06) (0.25) (0.14) (0.06)

Net issuance/repurchase of common stock (4) 0.05 — 0.16 0.03 0.42

Net asset value at end of period $9.00 $9.64 $9.85 $9.92 $10.07

Per share market value at beginning of period $9.18 $10.29 $10.98 $9.32 $11.14

Per share market value at end of period $6.17 $9.18 $10.29 $10.98 $9.32

Total return (1) (27.18)% (0.97)% 4.89% 32.59% (6.76)%

Common shares outstanding at beginning of period 153,340 139,041 91,048 72,376 54,550

Common shares outstanding at end of period 150,263 153,340 139,041 91,048 72,376

Net assets at beginning of period $1,478,475 $1,368,872 $903,570 $728,627 $569,172

Net assets at end of period $1,353,094 $1,478,475 $1,368,872 $903,570 $728,627

Average net assets (2) $1,413,357 $1,393,635 $1,095,225 $790,921 $677,354

Ratio of net investment income to average net assets 8.13% 10.23% 10.50% 11.13% 9.91%

Ratio of total expenses to average net assets (excluding base management fee waiver) 10.69% 10.91% 9.95% 9.95% 8.79%

Base management fee waiver effect (0.04)% (0.05)% (0.21)% —% —%

Ratio of net expenses to average net assets 10.65% 10.86% 9.74% 9.95% 8.79%

Ratio of portfolio turnover to average investments at fair value 23.02% 25.50% 38.22% 29.74% 7.26%

Weighted average outstanding debt (3) $1,228,413 $1,110,021 $597,596 $421,366 $247,549

Average debt per share (4) $8.02 $7.82 $5.42 $5.30 $3.86

Asset coverage ratio at end of period (5) 238.95% 259.50% 394.86% 385.71% 332.76%

(1) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP.

(2) Calculated based upon the weighted average net assets for the period.

(3) Calculated based upon the weighted average of loans payable for the period.

(4) Calculated based upon weighted average shares outstanding for the period.

(5) Based on outstanding senior securities of $975.3 million, $928.4 million, $464.3 million, $316.3 million and $313.0 million as of September 30, 2015, 2014, 2013, 2012 and 2011, respectively.

Selected Financial Data

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Part II incentive fee (5,557) 10,194 — — —

Fees waived 5,200 (7,990) (1,342) (240) (338)

All other expenses 33,409 40,373 46,881 64,729 97,338

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Cash, cash equivalents and restricted cash 39,096 15,406 13,489 59,913 130,362

Other assets 27,765 27,590 46,768 14,380 47,432

Total assets 1,640,712 1,481,038 1,551,458 1,616,048 2,343,285

Total liabilities 725,833 550,408 693,423 748,391 1,200,997

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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-K

Item 5. Market for Registrant’s Common Equity