UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2014

OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 1-33901

Fifth Street Finance Corp.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE (State or jurisdiction of incorporation or organization)	26-1219283 (I.R.S. Employer Identification No.)
777 West Putnam Avenue, 3rd Floor Greenwich, CT (Address of principal executive office)	06830 (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

(203) 681-3600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     NO   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ

The registrant had 153,340,371 shares of common stock outstanding as of February 6, 2015.

FIFTH STREET FINANCE CORP.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

		PART I — FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited):
		Consolidated Statements of Assets and Liabilities as of December 31, 2014 and September 30, 2014	1
		Consolidated Statements of Operations for the three months ended December 31, 2014 and 2013	2
		Consolidated Statements of Changes in Net Assets for the three months ended December 31, 2014 and 2013	3
		Consolidated Statements of Cash Flows for the three months ended December 31, 2014 and 2013	4
		Consolidated Schedules of Investments as of December 31, 2014	5
		Consolidated Schedule of Investments as of September 30, 2014	18
		Notes to Consolidated Financial Statements	30
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		71
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		98
Item 4.	Controls and Procedures		100
		PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		101
Item 1A.	Risk Factors		101
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		102
Item 6.	Exhibits		102
Signatures			102

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Fifth Street Finance Corp.

Consolidated Statements of Assets and Liabilities

(in thousands, except per share amounts)

(unaudited)

	December 31, 2014			September 30, 2014
ASSETS
Investments at fair value:
Control investments (cost December 31, 2014: $381,275; cost September 30, 2014: $387,625)	$	378,053		$	394,872
Affiliate investments (cost December 31, 2014: $37,518; cost September 30, 2014: $37,757)	40,390			40,764
Non-control/Non-affiliate investments (cost December 31, 2014: $2,350,146; cost September 30, 2014: $2,069,301)	2,303,152			2,060,278
Total investments at fair value (cost December 31, 2014: $2,768,939; cost September 30, 2014: $2,494,683)	2,721,595			2,495,914
Cash and cash equivalents	64,259			86,731
Restricted cash	46,294			22,315
Interest, dividends and fees receivable	15,195			15,224
Due from portfolio companies	27,225			22,950
Receivables from unsettled transactions	55,853			4,750
Deferred financing costs	18,985			20,334
Other assets	94			—
Total assets	$	2,949,500		$	2,668,218
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable, accrued expenses and other liabilities	$	3,866		$	3,908
Base management fee payable	14,044			12,372
Part I incentive fee payable	8,715			9,309
Due to FSC CT	3,552			2,464
Interest payable	11,655			5,797
Amounts payable to syndication partners	61			3,817
Payables from unsettled transactions	112,114			—
Credit facilities payable	617,495			317,395
SBA debentures payable	225,000			225,000
Unsecured convertible notes payable	115,000			115,000
Unsecured notes payable	410,121			409,878
Secured borrowings at fair value (proceeds of $22,525 and $84,750 at December 31, 2014 and September 30, 2014, respectively)	22,246			84,803
Total liabilities	1,543,869			1,189,743
Commitments and contingencies (Note 3)
Net assets:
Common stock, $0.01 par value,250,000 shares authorized; 153,340 shares issued and outstanding at December 31, 2014 and September 30, 2014	1,533			1,533
Additional paid-in-capital	1,649,086			1,649,086
Net unrealized appreciation (depreciation) on investments and secured borrowings	(47,065		)	1,178
Net realized loss on investments, secured borrowings and interest rate swap	(170,004		)	(152,416		)
Accumulated overdistributed net investment income	(27,919		)	(20,906		)
Total net assets (equivalent to $9.17 and $9.64 per common share at December 31, 2014 and September 30, 2014, respectively) (Note 12)	1,405,631			1,478,475
Total liabilities and net assets	$	2,949,500		$	2,668,218

See notes to Consolidated Financial Statements.

1

Fifth Street Finance Corp.

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three months ended December 31, 2014			Three months ended December 31, 2013
Interest income:
Control investments	$	6,264		$	2,419
Affiliate investments	1,097			766
Non-control/Non-affiliate investments	45,170			45,296
Interest on cash and cash equivalents	10			3
Total interest income	52,541			48,484
PIK interest income:
Control investments	1,765			2,408
Affiliate investments	215			335
Non-control/Non-affiliate investments	2,424			2,870
Total PIK interest income	4,404			5,613
Fee income:
Control investments	623			567
Affiliate investments	12			170
Non-control/Non-affiliate investments	17,267			16,401
Total fee income	17,902			17,138
Dividend and other income:
Control investments	1,138			—
Non-control/Non-affiliate investments	307			96
Total dividend and other income	1,445			96
Total investment income	76,292			71,331
Expenses:
Base management fee	14,155			12,059
Part I incentive fee	8,715			9,054
Professional fees	1,164			1,025
Board of Directors fees	180			155
Interest expense	13,992			10,213
Administrator expense	1,247			853
General and administrative expenses	1,780			1,754
Total expenses	41,233			35,113
Base management fee waived	(111		)	—
Net expenses	41,122			35,113
Net investment income	35,170			36,218
Unrealized appreciation (depreciation) on investments:
Control investments	(10,469		)	420
Affiliate investments	(135		)	783
Non-control/Non-affiliate investments	(37,971		)	(6,921		)
Net unrealized depreciation on investments	(48,575		)	(5,718		)
Net unrealized appreciation on secured borrowings	332			—
Realized gain (loss) on investments and secured borrowings:
Affiliate investments	43			—
Non-control/Non-affiliate investments	(17,631		)	3,206
Net realized gain (loss) on investments and secured borrowings	(17,588		)	3,206
Net increase (decrease) in net assets resulting from operations	$	(30,661	)	$	33,706
Net investment income per common share — basic	$	0.23		$	0.26
Earnings (loss) per common share — basic	$	(0.20	)	$	0.24
Weighted average common shares outstanding — basic	153,340			139,126
Net investment income per common share — diluted	$	0.23		$	0.26
Earnings (loss) per common share — diluted	$	(0.20	)	$	0.24
Weighted average common shares outstanding — diluted	161,130			149,916
Distributions per common share	$	0.28		$	0.24

See notes to Consolidated Financial Statements.

2

Fifth Street Finance Corp.

Consolidated Statements of Changes in Net Assets

(in thousands, except per share amounts)

(unaudited)

	Three months ended December 31, 2014			Three months ended December 31, 2013
Operations:
Net investment income	$	35,170		$	36,218
Net unrealized depreciation on investments	(48,575		)	(5,718		)
Net unrealized appreciation on secured borrowings	332			—
Net realized gain (loss) on investments and secured borrowings	(17,588		)	3,206
Net increase (decrease) in net assets resulting from operations	(30,661		)	33,706
Stockholder transactions:
Distributions to stockholders	(42,183		)	(33,613		)
Net decrease in net assets from stockholder transactions	(42,183		)	(33,613		)
Capital share transactions:
Issuance of common stock under dividend reinvestment plan	2,061			3,411
Repurchase of common stock under stock repurchase program	—			(406		)
Repurchase of common stock under dividend reinvestment program	(2,061		)	(2,002		)
Net increase (decrease) in net assets from capital share transactions	—			1,003
Total increase (decrease) in net assets	(72,844		)	1,096
Net assets at beginning of period	1,478,475			1,368,872
Net assets at end of period	$	1,405,631		$	1,369,968
Net asset value per common share	$	9.17		$	9.85
Common shares outstanding at end of period	153,340			139,138

See notes to Consolidated Financial Statements.

3

Fifth Street Finance Corp.

Consolidated Statements of Cash Flows

(in thousands, except per share amounts)

(unaudited)

	Three months ended December 31, 2014			Three months ended December 31, 2013
Cash flows used in operating activities:
Net increase (decrease) in net assets resulting from operations	$	(30,661	)	$	33,706
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Net unrealized depreciation on investments	48,575			5,718
Net unrealized appreciation on secured borrowings	(332		)	—
Net realized (gains) losses on investments and secured borrowings	17,588			(3,206		)
PIK interest income	(4,404		)	(5,613		)
Recognition of fee income	(17,902		)	(17,138		)
Accretion of original issue discount on investments	(258		)	(164		)
Accretion of original issue discount on unsecured notes payable	244			—
Amortization of deferred financing costs	1,349			1,405
Changes in operating assets and liabilities:
Fee income received	17,345			16,920
Increase in restricted cash	(23,979		)	—
(Increase) decrease in interest, dividends and fees receivable	9			(1,342		)
Increase in due from portfolio companies	(4,275		)	(1,280		)
Increase in receivables from unsettled transactions	(51,103		)	—
Increase in other assets	(94		)	(135		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	(42		)	1,982
Increase in base management fee payable	1,672			2,435
Increase (decrease) in Part I incentive fee payable	(594		)	1,879
Increase in due to FSC CT	1,088			1,293
Increase in interest payable	5,858			4,072
Increase (decrease) in payables from unsettled transactions	112,114			(35,716		)
Decrease in amounts payable to syndication partners	(3,756		)	—
Purchases of investments and net revolver activity	(722,328		)	(650,118		)
Principal payments received on investments (scheduled payments)	5,790			10,346
Principal payments received on investments (payoffs)	250,483			43,746
PIK interest income received in cash	658			4,226
Proceeds from the sale of investments	178,665			111,556
Net cash used in operating activities	(218,290		)	(475,428		)
Cash flows from financing activities:
Distributions paid in cash	(40,122		)	(30,202		)
Borrowings under SBA debentures payable	—			29,000
Borrowings under credit facilities	355,600			475,057
Repayments of borrowings under credit facilities	(55,500		)	(98,829		)
Repayments of secured borrowings	(62,099		)	—
Repurchases of common stock under stock repurchase program	—			(406		)
Repurchases of common stock under dividend reinvestment plan	(2,061		)	(2,002		)
Deferred financing costs paid	—			(1,432		)
Offering costs paid	—			(517		)
Net cash provided by financing activities	195,818			370,669
Net decrease in cash and cash equivalents	(22,472		)	(104,759		)
Cash and cash equivalents, beginning of period	86,731			147,359
Cash and cash equivalents, end of period	$	64,259		$	42,600
Supplemental information:
Cash paid for interest	$	6,601		$	4,834
Non-cash financing activities:
Issuance of shares of common stock under dividend reinvestment plan	$	2,061		$	3,411

See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost			Fair Value
Control Investments (3)
Traffic Solutions Holdings, Inc.	Construction and engineering
Second Lien Term Loan, 12% cash 3% PIK due 12/31/2016		$	15,056	$	15,045		$	14,997
LC Facility, 8.5% cash due 12/31/2016 (10)				(4		)	—
746,114 Series A Preferred Units				14,909			18,013
746,114 Common Stock Units				5,316			5,094
				35,266			38,104
TransTrade Operators, Inc. (9)	Air freight and logistics
First Lien Term Loan, 11% cash 3% PIK due 5/31/2016		15,973		15,572			8,865
First Lien Revolver, 8% cash due 5/31/2016		465		465			257
596.67 Series A Common Units				—			—
4,000,000 Series A Preferred Units in TransTrade Holdings LLC				4,000			—
5,200,000 Series B Preferred Units in TransTrade Holding LLC				5,200			—
				25,237			9,122
HFG Holdings, LLC (16)	Specialized finance
First Lien Term Loan, 6% cash 4% PIK due 6/10/2019		96,871		96,871			95,812
875,933 Class A Units				22,347			27,511
				119,218			123,323
First Star Aviation, LLC	Airlines
First Lien Term Loan, 9% cash 3% PIK due 1/9/2018		15,390		15,390			15,125
10,104,401 Common Units				10,104			11,860
				25,494			26,985
First Star Speir Aviation 1 Limited (12)	Airlines
First Lien Term Loan, 9% cash due 12/15/2015		47,823		47,823			48,870
2,058,411.64 Common Units				2,058			4,473
				49,881			53,343
First Star Bermuda Aviation Limited (12)	Airlines
First Lien Term Loan, 9% cash 3% PIK due 8/19/2018		24,844		24,844			25,228
4,293,042 Common Units				4,294			5,469
				29,138			30,697
Eagle Hospital Physicians, LLC	Healthcare services
First Lien Term Loan A, 8% PIK due 8/1/2016		12,337		12,337			12,127
First Lien Term Loan B, 8.1% PIK due 8/1/2016		3,370		3,370			3,317
First Lien Revolver, 8% cash due 8/1/2016		2,847		2,847			2,847
4,100,000 Class A Common Units				4,100			5,795
				22,654			24,086
Senior Loan Fund JV I, LLC (12)(17)	Multi-sector holdings
Subordinated Notes, LIBOR+8% cash due 5/2/2021 (14)		61,723		61,723			61,831
87.5% LLC equity interest (6)				6,858			4,756
				68,581			66,587
Miche Group, LLC	Apparel, accessories & luxury goods
First Lien Revolver, LIBOR+8% cash due 12/18/2016 (14)		500		500			500
100 units in FSFC Miche, Inc.				5,306			5,306
				5,806			5,806
Total Control Investments (26.9% of net assets)				$	381,275		$	378,053
Affiliate Investments (4)
Caregiver Services, Inc.	Healthcare services
Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019		$	9,192	$	9,192		$	9,016
1,080,399 shares of Series A Preferred Stock				1,080			3,935
				10,272			12,951
AmBath/ReBath Holdings, Inc.	Home improvement retail
First Lien Term Loan A, LIBOR+7% (3% floor) cash due 4/30/2016 (14)		740		740			763
First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016		26,506		26,506			26,213
4,668,788 Shares of Preferred Stock				—			463
				27,246			27,439
Total Affiliate Investments (2.9% of net assets)				$	37,518		$	40,390

See notes to Consolidated Financial Statements.

5

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost		Fair Value
Non-Control/Non-Affiliate Investments (7)
Thermoforming Technology Group LLC	Industrial machinery
33,786 shares of Common Stock (6)				$	849	$	788
				849		788
HealthDrive Corporation (9)	Healthcare services
First Lien Term Loan A, 10% cash due 12/31/15		$	4,358	4,357		4,323
First Lien Term Loan B, 12% cash 1% PIK due 12/31/15		11,522		11,522		11,461
First Lien Revolver, 12% cash due 12/31/15		2,266		2,266		2,266
				18,145		18,050
Cenegenics, LLC (9)	Healthcare services
First Lien Term Loan, 9.75% cash due 9/30/2019		31,726		31,703		31,166
414,419 Common Units				598		1,011
				32,301		32,177
Riverlake Equity Partners II, LP	Multi-sector holdings
1.78% limited partnership interest (12)				642		492
				642		492
Riverside Fund IV, LP	Multi-sector holdings
0.34% limited partnership interest (12)				643		629
				643		629
JTC Education, Inc. (9)	Education services
Subordinated Term Loan, 13% cash due 11/1/2017		15,823		14,441		12,727
17,391 Shares of Series A-1 Preferred Stock				313		—
17,391 Shares of Common Stock				187		—
				14,941		12,727
Psilos Group Partners IV, LP	Multi-sector holdings
2.35% limited partnership interest (11)(12)				—		—
				—		—
Mansell Group, Inc.	Advertising
First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2015 (14)		4,654		4,636		4,633
First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (14)		9,604		9,592		9,561
				14,228		14,194
Enhanced Recovery Company, LLC	Diversified support services
First Lien Term Loan A, LIBOR+7% (2% floor) cash due 8/13/2015 (14)		10,500		10,456		10,445
First Lien Term Loan B, LIBOR+10% (2% floor) cash 1% PIK due 8/13/2015 (14)		16,014		15,974		15,969
First Lien Revolver, LIBOR+7% (2% floor) cash due 8/13/2015 (14)		1,500		1,486		1,500
				27,916		27,914
Welocalize, Inc.	Internet software & services
3,393,060 Common Units in RPWL Holdings, LLC				3,393		5,988
				3,393		5,988
Bunker Hill Capital II (QP), L.P.	Multi-sector holdings
0.51% limited partnership interest (12)				380		266
				380		266
Physicians Pharmacy Alliance, Inc. (9)	Healthcare services
First Lien Term Loan, LIBOR+9% cash 1.5% PIK due 1/4/2016 (14)		10,492		10,422		10,446
				10,422		10,446
Cardon Healthcare Network, LLC	Diversified support services
69,487 Class A Units				265		647
				265		647
Phoenix Brands Merger Sub LLC (9)	Household products
Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016 (14)		2,261		2,227		2,167
Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017		32,914		31,410		19,908
First Lien Revolver, LIBOR+5% (1.5% floor) cash due 1/31/2016 (14)		3,214		3,178		3,214
				36,815		25,289

See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost			Fair Value
CCCG, LLC (9)	Oil & gas equipment services
First Lien Term Loan, LIBOR+8% (1.75% floor) cash 1% PIK due 12/29/2017 (14)		$	34,748	$	34,290		$	18,125
First Lien Revolver, LIBOR+5.5% (1.75% floor) cash due 12/29/2017 (14)				—			—
				34,290			18,125
Maverick Healthcare Group, LLC	Healthcare equipment
First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (14)		16,636		16,143			16,442
First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (14)		38,400		38,169			38,043
CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (14)		1,256		1,168			1,248
				55,480			55,733
Refac Optical Group (9)	Specialty stores
First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (14)		22,006		21,908			21,610
First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (14)		33,643		33,419			32,679
First Lien Term Loan C, 12% cash due 9/30/2018		3,413		3,413			3,383
First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (14)		1,600		1,567			1,600
1,550.9435 Shares of Common Stock in Refac Holdings, Inc.				1			—
550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc.				305			—
1,000 Series A Preferred Stock in Refac Holdings, Inc.				999			617
				61,612			59,889
Baird Capital Partners V, LP	Multi-sector holdings
0.4% limited partnership interest (12)				847			775
				847			775
Discovery Practice Management, Inc. (9)	Healthcare services
Senior Term Loan, LIBOR+9.75% cash due 11/4/2018 (14)		25,069		24,999			25,466
Senior Revolver, LIBOR+6% cash due 11/4/2018 (14)		500		486			500
Capex Line, LIBOR+7% cash due 11/4/2018 (14)		1,250		1,250			1,250
				26,735			27,216
Milestone Partners IV, L.P.	Multi-sector holdings
0.85% limited partnership interest (12)				1,334			1,322
				1,334			1,322
National Spine and Pain Centers, LLC	Healthcare services
Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2017		29,862		29,740			29,502
317,282.97 Class A Units				317			661
				30,057			30,163
RCPDirect, L.P.	Multi-sector holdings
0.91% limited partnership interest (12)				656			787
				656			787
Digi-Star Acquisition Holdings, Inc.	Industrial machinery
Subordinated Term Loan, 12% cash 1.5% PIK due 11/18/2017		16,762		16,703			16,299
264.37 Class A Preferred Units				115			125
2,954.87 Class A Common Units				36			464
				16,854			16,888
Riverside Fund V, L.P.	Multi-sector holdings
0.48% limited partnership interest (12)				619			431
				619			431
World 50, Inc.	Research & consulting services
Senior Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (14)		7,766		7,709			7,888
Senior Term Loan B, 12.5% cash due 3/30/2017		7,000		6,963			6,901
Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)(14)				(27		)	—
				14,645			14,789

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost			Fair Value
ACON Equity Partners III, LP
0.13% limited partnership interest (12)	Multi-sector holdings			$	498		$	447
				498			447
BMC Acquisition, Inc.	Other diversified financial services
500 Series A Preferred Shares				499			615
50,000 Common Shares (6)				1			53
				500			668
Ansira Partners, Inc. (9)	Advertising
First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (10)(14)				(4		)	—
250 Preferred Units & 250 Class A Common Units of Ansira Holdings, LLC				250			331
				246			331
Edmentum, Inc.	Education services
Second Lien Term Loan, LIBOR+9.75% (1.5% floor) cash due 5/17/2019 (14)		$	17,000	17,000			6,800
				17,000			6,800
I Drive Safely, LLC	Education services
75,000 Class A Common Units of IDS Investments, LLC				1,000			766
				1,000			766
Yeti Acquisition, LLC (9)	Leisure products
First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)		10,692		10,675			10,866
First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK, due 6/15/2017 (14)		8,290		8,282			8,102
First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (10)(14)				(6		)	—
1,500 Common Stock Units of Yeti Holdings, Inc.				1,500			4,507
				20,451			23,475
Specialized Education Services, Inc.	Education services
First Lien Term Loan A, LIBOR+7% (1.5% floor) cash due 6/28/2017 (14)		8,193		8,193			7,932
Subordinated Term Loan B, 11% cash 1.5% PIK due 6/28/2018		18,181		18,181			17,588
				26,374			25,520
Vitalyst Holdings, Inc. (formerly known as PC Helps Support, LLC)	IT consulting & other services
Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018		19,165		19,165			18,671
675 Series A Preferred Units of PCH Support Holdings, Inc.				675			816
7,500 Class A Common Stock Units of PCH Support Holdings, Inc.				75			—
				19,915			19,487
Beecken Petty O'Keefe Fund IV, L.P.	Multi-sector holdings
0.5% limited partnership interest (12)				567			515
				567			515
Deltek, Inc. (9)	IT consulting & other services
Second Lien Term Loan, LIBOR+8.75% (1.25% floor) cash due 10/10/2019 (14)		25,000		25,000			25,168
First Lien Revolver, LIBOR+4.75% (1.25% floor) cash due 10/10/2017 (14)				—			—
				25,000			25,168
First American Payment Systems, LP	Diversified support services
Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (14)		23,304		23,304			23,159
First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (14)		1,358		1,358			1,340
				24,662			24,499
Dexter Axle Company	Auto parts & equipment
1,500 Common Shares in Dexter Axle Holding Company				1,500			3,116
				1,500			3,116
Comprehensive Pharmacy Services LLC	Pharmaceuticals
Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019		14,416		14,416			14,171
20,000 Common Shares in MCP CPS Group Holdings, Inc.				2,000			2,549
				16,416			16,720

See notes to Consolidated Financial Statements.

8

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost			Fair Value
Garretson Firm Resolution Group, Inc.	Diversified support services
Mezzanine Term Loan, 11% cash 1.5% PIK due 6/20/2019		$	5,114	$	5,114		$	5,038
First Lien Revolver, LIBOR+5% (1.25% floor) cash due 12/20/2017 (14)		609		609			603
4,950,000 Preferred Units in GRG Holdings, LP				495			501
50,000 Common Units in GRG Holdings, LP				5			—
				6,223			6,142
Teaching Strategies, LLC	Education services
Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)		14,861		14,853			14,861
Senior Delayed Draw Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)		99		99			99
Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (10)(14)				(1		)	—
				14,951			14,960
Omniplex World Services Corporation	Security & alarm services
Subordinated Term Loan, 12.25% cash 1.25% PIK due 12/21/2018		12,826		12,826			12,426
500 units Class A Common Units in Omniplex Holdings Corp.				500			586
				13,326			13,012
Dominion Diagnostics, LLC (9)	Healthcare services
Subordinated Term Loan, 11% cash 2% PIK due 12/21/2018		16,031		16,031			15,931
				16,031			15,931
Affordable Care, Inc.	Healthcare services
Second Lien Term Loan, LIBOR+9.25% (1.25% floor) cash due 12/26/2019 (14)		23,250		23,250			23,018
				23,250			23,018
Aderant North America, Inc.	Internet & software services
Second Lien Term Loan, LIBOR+8.75% (1.25% floor) cash due 6/20/2019 (14)		7,000		7,000			6,983
				7,000			6,983
AdVenture Interactive, Corp.	Advertising
First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)		107,863		107,855			107,282
First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)				—			—
2,000 Preferred Units of AVI Holdings, L.P.				1,811			1,349
				109,666			108,631
CoAdvantage Corporation	Human resources & employment services
Mezzanine Term Loan, 11.5% cash 1.25% PIK due 12/31/2018		14,939		14,939			14,939
50,000 Class A Units in CIP CoAdvantage Investments LLC				557			924
				15,496			15,863
EducationDynamics, LLC (9)	Education services
Mezzanine Term Loan, 12% cash 6% PIK due 1/16/2017		13,045		13,045			12,674
				13,045			12,674
Sterling Capital Partners IV, L.P.	Multi-sector holdings
0.2% limited partnership interest (12)				874			761
				874			761
RP Crown Parent, LLC	Application software
First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (10)(14)				(434		)	—
				(434		)	—
Advanced Pain Management	Healthcare services
First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (14)		24,000		24,000			23,712
				24,000			23,712
Rocket Software, Inc.	Internet & software services
Second Lien Term Loan, LIBOR+8.75% (1.5% floor) cash due 2/8/2019 (14)		10,475		10,444			10,481
				10,444			10,481

See notes to Consolidated Financial Statements.

9

Fifth Street Finance Corp.

Consolidated Schedule of Investments

(dollar amounts in thousands)

December 31, 2014

(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)	Industry	Principal (8)		Cost		Fair Value
TravelClick, Inc.	Internet software & services
First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 5/6/2019		$	4,976	$	4,976	$	4,920
Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/8/2021 (14)		10,000		10,000		9,650
				14,976		14,570
Pingora MSR Opportunity Fund I-A, LP	Thrift & mortgage finance
1.9% limited partnership interest (12)				5,778		5,687
				5,778		5,687
Credit Infonet, Inc. (9)	Data processing & outsourced services
Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2018		13,334		13,334		12,934
				13,334		12,934
2Checkout.com, Inc.	Diversified support services
First Lien Revolver, LIBOR+5% cash due 6/26/2016 (14)		2,150		2,148		2,082
				2,148		2,082
Meritas Schools Holdings, LLC	Education services
First Lien Term Loan, LIBOR+5.75% (1.25% floor) cash due 6/25/2019 (14)		2,478		2,478		2,469
Second Lien Term Loan, LIBOR+9% (1% floor) cash due 1/23/2021 (14)		19,500		19,500		19,208
				21,978		21,677
Chicago Growth Partners III, LP	Multi-sector holdings
0.5% limited partnership interest (11)(12)				—		—
				—		—
Royal Adhesives and Sealants, LLC	Specialty chemicals
Second Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 1/31/2019 (11) (14)		13,500		13,500		13,612
				13,500		13,612
Bracket Holding Corp.	Healthcare services