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10-Q 1 d802296d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019

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

For the transition period from to

Commission file number 814-01069

TCW DIRECT LENDING LLC

(Exact Name of Registrant as Specified in Its Charter)


Delaware		46-5327366
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

200 Clarendon Street, Boston, MA		02116
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 936-2275

Not applicable

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

Not applicable

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☐ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

The number of the Registrant’s common units outstanding at November 4, 2019 was 20,134,698.

TCW DIRECT LENDING LLC

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019

Table of Contents


	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Schedules of Investments as of September 30, 2019 (unaudited) and December 31, 2018		2
	Consolidated Statements of Assets and Liabilities as of September 30, 2019 (unaudited) and December 31, 2018		12
	Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (unaudited)		13
	Consolidated Statements of Changes in Members’ Capital for the three and nine months ended September 30, 2019 and 2018 (unaudited)		14
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)		16
	Notes to Consolidated Financial Statements (unaudited)		17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		43
Item 4.	Controls and Procedures		43

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 3.	Defaults Upon Senior Securities		44
Item 4.	Mine Safety Disclosures		44
Item 5.	Other Information		44
Item 6.	Exhibits		45

SIGNATURES			46

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited)

As of September 30, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt
Auto Components
	Challenge Manufacturing Company LLC		04/20/17	Term Loan—9.50% (LIBOR + 7.00%, 1.00% Floor)		5.4	%	$	47,901,576		04/20/22	$	47,351,468	$	47,374,659

						5.4	%		47,901,576				47,351,468		47,374,659

Commercial Services & Supplies
	School Specialty, Inc.		04/07/17	Delayed Draw Term Loan—12.05% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		0.5	%		5,231,862		04/07/22		5,231,862		4,760,994
	School Specialty, Inc.		04/07/17	Term Loan A—12.05% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		4.0	%		37,920,193		04/07/22		37,472,970		34,507,376

						4.5	%		43,152,055				42,704,832		39,268,370

Construction & Engineering
	Intren, LLC		07/18/17	Term Loan—8.86% (LIBOR + 6.75%, 1.25% Floor)		1.0	%		10,628,284		07/18/23		10,493,878		8,268,805

						1.0	%		10,628,284				10,493,878		8,268,805

Distributors
	ASC Acquisition Holdings, LLC		02/25/19	Term Loan—12.26% inc. PIK (LIBOR + 7.50%, 1.00% Floor, 2.50% PIK)		2.3	%		23,040,059		02/22/22		22,268,543		19,952,691

						2.3	%		23,040,059				22,268,543		19,952,691

Diversified Financial Services
	Carrier & Technology Holdings, LLC		07/02/18	Term Loan—11.75% (11.75%, Fixed Coupon, all PIK)		0.0	%		41,422,923		07/02/23		41,280,142		—
	Guardia LLC (fka Carrier & Technology Solutions, LLC)(1)		07/02/18	Revolver—9.37% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.9	%		7,867,591		07/02/23		7,867,591		7,867,591
	Guardia LLC (fka Carrier & Technology Solutions, LLC)		07/02/18	Term Loan—9.37% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.9	%		11,812,123		07/02/23		11,770,402		7,382,577

						1.8	%		19,679,714				19,637,993		15,250,168

	Verus Analytics, LLC		04/11/16	First Lien Term Loan—9.36% (LIBOR + 7.25%, 0.75% Floor)		1.8	%		15,968,750		04/12/21		15,871,137		15,968,750

						3.6	%		77,071,387				76,789,272		31,218,918

Food Products
	Bumble Bee Holdings, Inc.		08/15/17	Term Loan B1—13.75% inc PIK (PRIME + 7.00%, 2.00% Floor, 1.50% PIK)		3.7	%		33,043,186		08/15/23		32,619,845		31,655,372
	Connors Bros. Clover Leaf Seafoods Company (Canada) (an affiliate of Bumble Bee Holdings, Inc.)(2)		08/15/17	Term Loan B2 – 13.75% inc PIK (PRIME + 7.00%, 2.00% Floor, 1.50% PIK)		1.0	%		9,361,692		08/15/23		9,241,753		8,968,501
	Harvest Hill Beverage Company		05/01/17	Term Loan A1—8.55% (LIBOR + 6.50%, 1.00% Floor)		7.4	%		64,361,688		01/19/21		64,110,021		64,361,688

						12.1	%		106,766,566				105,971,619		104,985,561

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of September 30, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Health Care Providers & Services
	Help at Home, LLC(1),(3)		08/03/15	Term Loan B—8.86% (LIBOR + 6.75%, 1.25% Floor)		5.2	%	$	45,102,991		08/03/20	$	44,958,985	$	45,328,505

						5.2	%		45,102,991				44,958,985		45,328,505

Hotels, Restaurants & Leisure
	FQSR, LLC(1)		05/14/18	Delayed Draw Term Loan—7.65% (LIBOR + 5.50%, 1.00% Floor)		1.2	%		10,352,449		05/14/23		10,352,449		10,352,449
	FQSR, LLC		05/14/18	Term Loan—7.68% (LIBOR + 5.50%, 1.00% Floor)		2.8	%		24,262,234		05/14/23		23,684,257		24,262,234

						4.0	%		34,614,683				34,036,706		34,614,683

	OTG Management, LLC		06/30/16	Delayed Draw Term Loan—9.18% (LIBOR + 7.00%, 1.00% Floor)		2.1	%		18,546,807		08/26/21		18,481,011		18,639,541
	OTG Management, LLC		06/30/16	Term Loan—9.29% (LIBOR + 7.00%, 1.00% Floor)		6.7	%		58,502,243		08/26/21		58,056,908		58,794,754

						8.8	%		77,049,050				76,537,919		77,434,295

	Ruby Tuesday, Inc.(1)		12/21/17	Term Loan—12.10% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		2.4	%		21,214,990		12/21/22		20,495,275		20,599,755

						15.2	%		132,878,723				131,069,900		132,648,733

Household Durables
	Cedar Electronics Holdings, Corp.		01/03/19	Incremental Term Loan—15.00% inc PIK (15.00% , Fixed Coupon, all PIK)		0.3	%		2,639,300		06/26/20		2,639,300		2,507,335
	Cedar Electronics Holdings, Corp.		05/19/15	Term Loan—10.14% (LIBOR + 8.00%, 1.50% Floor)		2.1	%		19,778,482		06/26/20		19,711,194		18,789,558

						2.4	%		22,417,782				22,350,494		21,296,893

Industrial Conglomerates
	H-D Advanced Manufacturing Company(3)		06/30/15	First Lien Last Out Term Loan—10.60% inc. PIK (LIBOR + 7.00%, 1.00% Floor, 1.50% PIK)		11.5	%		104,648,106		12/31/21		104,232,948		99,938,941

						11.5	%		104,648,106				104,232,948		99,938,941

Information Technology Services
	ENA Holding Corporation		05/06/16	First Lien Term Loan—9.62% inc PIK (LIBOR + 5.00%, 1.00% Floor, 2.50% PIK)		4.8	%		43,999,293		05/06/21		43,653,276		41,887,327
	ENA Holding Corporation		05/06/16	Revolver—9.66% (LIBOR + 5.00%, 1.00% Floor, 2.50% PIK)		0.9	%		8,064,690		05/06/21		8,064,690		7,677,585

						5.7	%		52,063,983				51,717,966		49,564,912

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC		08/28/17	First Lien Term Loan—11.04% (LIBOR + 9.00%, 1.00% Floor)		1.4	%		12,569,375		08/28/22		12,349,109		12,431,112

						1.4	%		12,569,375				12,349,109		12,431,112

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of September 30, 2019


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Metals & Mining
	Pace Industries, Inc.		06/30/15	First Lien Term Loan—11.36% inc. PIK (LIBOR + 8.25%, 1.00% Floor, 1.00% PIK)		10.5	%	$	93,088,869		06/30/20	$	91,051,790	$	91,878,713

						10.5	%		93,088,869				91,051,790		91,878,713

Pharmaceuticals
	Noramco, LLC(3)		07/01/16	Senior Term Loan—10.70% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 0.38% PIK)		4.6	%		51,001,613		07/01/21		50,765,513		40,138,270

						4.6	%		51,001,613				50,765,513		40,138,270

Software
	Quicken Parent Corp.(1)		04/01/16	First Lien Term Loan —11.12% inc. PIK (LIBOR + 8.50%, 1.00% Floor, 0.50% PIK)		2.3	%		20,686,991		04/01/21		20,638,063		19,921,573

						2.3	%		20,686,991				20,638,063		19,921,573

Textiles, Apparel & Luxury Goods
	Frontier Spinning Mills, Inc.		08/06/19	Additional Term Loan B—10.31% (LIBOR + 8.50%, 1.00% Floor)		0.0	%		761,984		04/30/20		761,984		380,992
	Frontier Spinning Mills, Inc.		04/18/19	Incremental Term Loan B—10.31% (LIBOR + 8.25%, 1.00% Floor)		0.0	%		2,352,923		04/30/20		2,349,769		129,411
	Frontier Spinning Mills, Inc.		02/21/19	Last Out Revolver—7.75% (PRIME + 2.25%, 0.00% Floor)		0.1	%		750,000		04/30/20		750,000		750,000
	Frontier Spinning Mills, Inc.		04/18/19	Last Out Revolver Term Loan—7.25% (PRIME + 2.25%, 0.00% Floor)		0.3	%		2,268,366		04/30/20		2,268,366		2,268,366
	Frontier Spinning Mills, Inc.(3)		05/19/15	Last Out Term Loan B—10.31% (LIBOR + 8.25%, 1.00% Floor)		0.1	%		14,051,976		04/30/20		14,037,036		772,858

						0.5	%		20,185,249				20,167,155		4,301,627

	Total Debt Investments					88.2	%						854,881,535		768,518,283


	Equity							Shares
Auto Components
	KPI Holding LLC(4)			Warrant, expires 06/30/2020		0.2	%		4,466				1,692,000		1,692,000

						0.2	%		4,466				1,692,000		1,692,000

Distributors
	Animal Supply Holdings, LLC(4)			Class A		0.0	%		9,807				708,537		42,730

						0.0	%		9,807				708,537		42,730

Diversified Financial Services
	Carrier & Technology Holdings, LLC(4),(5)			Common Stock		0.0	%		2,143				—		—
	Verus Financial, LLC(6)			Common Stock		0.8	%		8,750				7,640,647		6,683,942

						0.8	%		10,893				7,640,647		6,683,942

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of September 30, 2019


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Shares		Maturity Date	Amortized Cost		Fair Value
Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.)(4)		Warrant, expires 12/21/27		0.1	%		1,470,632		$	1,379,747	$	1,019,548

					0.1	%		1,470,632			1,379,747		1,019,548

Household Durables
	Cedar Ultimate Parent LLC(4)		Common Stock		0.0	%		300,000			—		—
	Cedar Ultimate Parent LLC(4)		Preferred Stock		0.0	%		9,297,990			9,187,900		—
	Cedar Ultimate Parent LLC(4)		Preferred Stock		0.0	%		2,900,000			—		—

					0.0	%		12,497,990			9,187,900		—

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(4)		Common Stock		0.3	%		391,945			1,708,311		2,234,087
	Quantum Corporation(4)		Warrant, expires 10/31/23		0.4	%		900,045			1,192,100		3,724,203
	Quantum Corporation(4)		Warrant, expires 11/30/23		0.2	%		450,022			596,050		1,862,103
	Quantum Corporation(4)		Warrant, expires 9/30/23		0.4	%		900,045			1,217,214		3,724,203
	Quantum Corporation(4)		Warrant, expires 9/7/23		0.4	%		900,045			1,143,057		3,724,204

					1.7	%		3,542,102			5,856,732		15,268,800

Textiles, Apparel & Luxury Goods
	ASP Frontier Holdings, Inc.(4)		Warrant, expires 5/15/23		0.0	%		88,024			6,506		—

					0.0	%		88,024			6,506		—

	Total Equity Investments				2.8	%					26,472,069		24,707,020

	Total Non-Controlled/Non-Affiliated Investments*				91.0	%				$	881,353,604	$	793,225,303

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Unaudited) (Continued)

As of September 30, 2019


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Shares		Maturity Date	Amortized Cost		Fair Value
	Controlled/Affiliated Investments
Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2),(7)		Preferred membership interests		28.4	%		235,200		$	235,200,003	$	247,499,230
	TCW Direct Lending Strategic Ventures LLC(2),(7)		Common membership interests		0.0	%		800			—		—

	Total Controlled/Affiliated Investments				28.4	%				$	235,200,003	$	247,499,230


										Cost
	Cash Equivalents
	Blackrock Liquidity Funds, Yield 1.86%				18.7	%		162,696,896			162,696,896		162,696,896

	Total Investments 138.1%									$	1,279,250,503	$	1,203,421,429

	Net unrealized depreciation on unfunded commitments (0.0%)											$	(31,913	)
	Liabilities in Excess of Other Assets (38.1%)											$	(331,933,701	)

	Net Assets 100.0%											$	871,455,815

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s stock as of September 30, 2019. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of each non-controlled/non-affiliated investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

Excluded from the investment above, is an unfunded loan commitment for a delayed draw term loan or revolving credit. The Company earns an unused fee on the unfunded commitment during the commitment period. The expiration date of the commitment period may be earlier than the maturity date of the investment stated above. See Note 5—Commitments and Contingencies.

(2)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of September 30, 2019, $256,471,578 or 20.7% of the Company’s total assets were represented by “non-qualifying assets.”

(3)	In addition to the interest earned based on the stated interest rate of this loan, the Company is entitled to receive an additional interest amount on the “first out” tranche of the portfolio company’s first lien senior secured loans.

(4)	Non-income producing.

(5)	Holdings of Carrier & Technology Holdings, LLC common stock are held through TCW DL CTH LLC, a special purpose vehicle.

(6)	Holdings of Verus Financial, LLC common stock are held through TCW DL VF Holdings, Inc., a special purpose vehicle.

(7)

As defined in the Investment Company Act of 1940, the investment is deemed to be a “controlled affiliated person” of the Company because the Company owns, either directly or indirectly, 25% or more of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company.

LIBOR—London Interbank Offered Rate, generally 1-Month or 3-Month

Prime—Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $46,781,395 and $104,946,752, respectively, for the nine months ended September 30, 2019. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown of Portfolio
United States	99.3	%
Canada	0.7	%

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments

As of December 31, 2018


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments Debt
Auto Components
	Challenge Manufacturing Company LLC		04/20/17	Term Loan—9.03% (LIBOR + 6.50%, 1.00% Floor)		5.4	%	$	49,954,501		04/20/22	$	49,212,783	$	49,454,956

						5.4	%		49,954,501				49,212,783		49,454,956

Chemicals
	Ascensus Specialties LLC (fka Vertellus Performance Chemicals LLC)(1)		09/22/17	First Lien Term Loan—9.28% (LIBOR + 6.75%, 1.25% Floor)		4.6	%		41,496,364		09/22/22		40,762,340		41,620,853

						4.6	%		41,496,364				40,762,340		41,620,853

Commercial Services & Supplies
	School Specialty, Inc.		04/07/17	Delayed Draw Term Loan—9.53% (LIBOR + 7.00%, 1.00% Floor)		0.6	%		5,467,476		04/07/22		5,467,476		5,150,362
	School Specialty, Inc.		04/07/17	Term Loan A—9.51% (LIBOR + 7.00%, 1.00% Floor)		4.0	%		39,259,771		04/07/22		38,654,010		36,982,704

						4.6	%		44,727,247				44,121,486		42,133,066

Construction & Engineering
	Intren, LLC		07/18/17	Term Loan—9.10% (LIBOR + 6.75%, 1.25% Floor)		1.0	%		13,196,154		07/18/23		12,996,406		9,382,465

						1.0	%		13,196,154				12,996,406		9,382,465

Distributors
	ASC Acquisition Holdings, LLC		12/16/16	First Lien Term Loan—10.03% (LIBOR + 7.50%, 1.00% Floor)		2.4	%		24,096,797		12/15/21		23,811,851		21,614,827
	ASC Acquisition Holdings, LLC		12/17/18	Term Loan—10.29% (LIBOR + 7.50%, 1.00% Floor)		0.3	%		3,154,908		12/15/21		3,091,810		3,154,908

						2.7	%		27,251,705				26,903,661		24,769,735

Diversified Financial Services
	Carrier & Technology Holdings, LLC		07/02/18	Term Loan—11.75% (11.75%, Fixed Coupon, all PIK)		0.6	%		37,896,029		07/02/23		37,724,796		5,229,652
	Carrier & Technology Solutions, LLC(1)		07/02/18	Revolver—9.71% (LIBOR + 7.25%, 1.50% Floor, all PIK)		0.8	%		7,198,078		07/02/23		7,198,078		7,198,078
	Carrier & Technology Solutions, LLC		07/02/18	Term Loan—9.60% (LIBOR + 7.25%, 1.50% Floor, all PIK)		1.2	%		11,147,081		07/02/23		11,096,219		11,147,081

						2.0	%		18,345,159				18,294,297		18,345,159

	Verus Analytics, LLC (fka Verus Financial, LLC)		04/11/16	First Lien Term Loan—10.00% (PRIME + 4.50%, 3.50% Floor)		1.8	%		16,296,875		04/12/21		16,148,606		16,296,875

						4.4	%		72,538,063				72,167,699		39,871,686

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2018


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Diversified Telecommunication Services
	Alaska Communications Systems Holdings, Inc.		05/08/18	Term Loan A1—7.52% (LIBOR + 5.00%, 1.00% Floor)		0.1	%	$	1,386,161		03/13/22	$	1,386,505	$	1,386,161
	Alaska Communications Systems Holdings, Inc.		03/28/17	Term Loan A2—9.52% (LIBOR + 7.00%, 1.00% Floor)		1.8	%		16,060,982		03/13/23		15,893,682		16,060,982

						1.9	%		17,447,143				17,280,187		17,447,143

Food Products
	Bumble Bee Holdings, Inc.		08/15/17	Term Loan B1—10.65% (LIBOR + 8.00%, 1.00% Floor)		3.4	%		32,913,669		08/15/23		32,404,728		31,432,554
	Connors Bros. Clover Leaf Seafoods Company (Canada) (an affiliate of Bumble Bee Holdings, Inc.)(2)		08/15/17	Term Loan B2—10.65% (LIBOR + 8.00%, 1.00% Floor)		1.0	%		9,324,998		08/15/23		9,180,807		8,905,373
	Harvest Hill Beverage Company		01/20/16	Term Loan A1—9.03% (LIBOR + 6.50%, 1.00% Floor)		8.1	%		74,703,910		01/19/21		74,244,287		73,732,760

						12.5	%		116,942,577				115,829,822		114,070,687

Health Care Providers & Services
	Help at Home, LLC(1)(3)		08/03/15	Term Loan B—9.10% (LIBOR + 6.75%, 1.25% Floor)		4.1	%		37,602,990		08/03/20		37,413,881		37,791,005

						4.1	%		37,602,990				37,413,881		37,791,005

Hotels, Restaurants & Leisure
	FQSR, LLC(1)		05/14/18	Delayed Draw Term Loan—8.39% (LIBOR + 5.50%, 1.00% Floor)		0.6	%		5,359,807		05/14/23		5,359,807		5,290,130
	FQSR, LLC		05/14/18	Term Loan—8.12% (LIBOR + 5.50%, 1.00% Floor)		2.6	%		24,446,504		05/14/23		23,743,784		24,128,699

						3.2	%		29,806,311				29,103,591		29,418,829

	OTG Management, LLC		06/30/16	Delayed Draw Term Loan—9.58% (LIBOR + 7.00%, 1.00% Floor)		2.0	%		18,546,807		08/26/21		18,455,167		18,416,979
	OTG Management, LLC		06/30/16	Term Loan—9.47% (LIBOR + 7.00%, 1.00% Floor)		6.4	%		58,502,243		08/26/21		57,881,978		58,092,727

						8.4	%		77,049,050				76,337,145		76,509,706

	Ruby Tuesday, Inc.(1)		12/21/17	Term Loan—12.80% inc. PIK (LIBOR + 8.00%, 1.00% Floor, 2.00% PIK)		3.4	%		33,305,611		12/21/22		31,876,363		31,207,358

						15.0	%		140,160,972				137,317,099		137,135,893

Household Durables
	Cedar Electronics Holdings, Corp.		05/19/15	Term Loan—10.34% (LIBOR + 8.00%, 1.50% Floor)		1.9	%		19,200,000		06/26/20		19,018,034		17,683,200

						1.9	%		19,200,000				19,018,034		17,683,200

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2018


Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
Industrial Conglomerates
	H-D Advanced Manufacturing Company		06/30/15	First Lien Last Out Term Loan—13.30% inc. PIK (LIBOR + 7.00%, 1.00% Floor, 3.50% PIK)		11.3	%	$	105,769,165		12/31/21	$	105,201,819	$	103,442,243

						11.3	%		105,769,165				105,201,819		103,442,243

Information Technology Services
	ENA Holding Corporation		05/06/16	First Lien Term Loan—9.53% (LIBOR + 7.00%, 1.00% Floor)		4.7	%		44,302,885		05/06/21		43,790,131		43,062,404
	ENA Holding Corporation(1)		05/06/16	Revolver—9.79% (LIBOR + 7.00%, 1.00% Floor)		0.7	%		6,405,720		05/06/21		6,405,720		6,226,360

						5.4	%		50,708,605				50,195,851		49,288,764

Internet & Direct Marketing Retail
	Lulu’s Fashion Lounge, LLC		08/28/17	First Lien Term Loan—9.52% (LIBOR + 7.00%, 1.00% Floor)		1.5	%		13,401,172		08/28/22		13,105,965		13,535,184

						1.5	%		13,401,172				13,105,965		13,535,184

Metals & Mining
	Pace Industries, Inc.		06/30/15	First Lien Term Loan—11.06% (LIBOR + 8.25%, 1.00% Floor)		9.1	%		84,118,105		06/30/20		83,754,730		83,108,688

						9.1	%		84,118,105				83,754,730		83,108,688

Pharmaceuticals
	Noramco, LLC(3)		07/01/16	Senior Term Loan—10.40% (LIBOR + 8.00%, 1.00% Floor)		5.0	%		51,289,164		07/01/21		50,949,495		45,955,091

						5.0	%		51,289,164				50,949,495		45,955,091

Software
	Quicken Parent Corp.(1)		04/01/16	First Lien Term Loan—11.35% inc. PIK (LIBOR + 8.50%, 1.00% Floor, 0.50% PIK)		2.3	%		21,769,443		04/01/21		21,691,954		20,680,971

						2.3	%		21,769,443				21,691,954		20,680,971

Textiles, Apparel & Luxury Goods
	Frontier Spinning Mills, Inc.(3)		05/19/15	Last Out Term Loan B—10.78% (LIBOR + 8.25%, 1.00% Floor)		0.8	%		12,960,042		04/30/20		12,925,853		7,192,823

						0.8	%		12,960,042				12,925,853		7,192,823

	Total Debt Investments Equity					93.5	%						910,849,065		854,564,453


								Shares
Diversified Financial Services
	Carrier & Technology Holdings, LLC(7)			Common Stock		0.0	%		2,143				—		—

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2018


Industry	Issuer	Acquisition Date	Investment	% of Net Assets			Shares		Maturity Date	Amortized Cost		Fair Value
	Verus Financial, LLC(4)		Common Stock		0.9	%		8,750		$	7,640,647	$	8,738,810

					0.9	%		10,893			7,640,647		8,738,810

Hotels, Restaurants & Leisure
	RTI Holding Company, LLC (an affiliate of Ruby Tuesday, Inc.) (7)		Warrant, expires 12/21/27		0.1	%		1,470,632			1,379,747		536,201

					0.1	%		1,470,632			1,379,747		536,201

Household Durables
	Cedar Ultimate Parent LLC(7)		Common Stock		0.0	%		300,000			—		—
	Cedar Ultimate Parent LLC(7)		Preferred Stock		0.0	%		9,297,990			9,187,900		—
	Cedar Ultimate Parent LLC(7)		Preferred Stock		0.0	%		2,900,000			—		—

					0.0	%		12,497,990			9,187,900		—

Technologies Hardware, Storage and Peripherals
	Quantum Corporation(7)		Common Stock		0.1	%		391,945			1,708,311		783,890
	Quantum Corporation(7)		Warrant, expires 10/31/23		0.1	%		900,045			1,192,100		373,415
	Quantum Corporation(5) (7)		Warrant, expires 11/30/23		0.0	%		900,045			1,192,101		187,157
	Quantum Corporation(7)		Warrant, expires 9/30/23		0.0	%		900,045			1,217,214		373,414
	Quantum Corporation(7)		Warrant, expires 9/7/23		0.0	%		900,045			1,143,057		373,414

					0.2	%		3,992,125			6,452,783		2,091,290

Textiles, Apparel & Luxury Goods
	ASP Frontier Holdings, Inc. (7)		Warrant, expires 5/15/23		0.0	%		5,674			—		25,929

					0.0	%		5,674			—		25,929

	Total Equity Investments				1.2	%					24,661,077		11,392,230

	Total Non-Controlled/Non-Affiliated Investments*				94.7	%				$	935,510,142	$	865,956,683


										Cost
	Controlled/Affiliated Investments
Investment Funds & Vehicles
	TCW Direct Lending Strategic Ventures LLC(2)(6)		Preferred membership interests		28.5	%		261,153		$	235,200,003	$	260,252,121
	TCW Direct Lending Strategic Ventures LLC(2)(6)		Common membership interests		0.0	%		800			—		—

	Total Controlled/Affiliated Investments				28.5	%				$	235,200,003	$	260,252,121

	Cash Equivalents
	Blackrock Liquidity Funds, Yield 2.31%				8.1	%		73,674,801			73,674,801		73,674,801

Total Investments 131.3%										$	1,244,384,946	$	1,199,883,605

Net unrealized depreciation on unfunded commitments (0.0%)												$	(169,454	)

Liabilities in Excess of Other Assets (31.3%)												$	(286,170,835	)

Net Assets 100.0%												$	913,543,316

TCW DIRECT LENDING LLC

Consolidated Schedule of Investments (Continued)

As of December 31, 2018

The fair value of the Quantum Corporation Common Stock held by the Company is based on the quoted market price of the issuer’s common stock as of December 31, 2018. Such common stock is considered to be a Level 1 security within the Fair Value Hierarchy. The fair value of each non-controlled/non-affiliated investment was determined using significant unobservable inputs and such investments are considered to be Level 3 within the Fair Value Hierarchy. See Note 3 “Investment Valuations and Fair Value Measurements.”

(1)

(2)

The investment is not a qualifying asset as defined in Section 55(a) under the Investment Company Act of 1940, as amended. A business development company may not acquire an asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2018, $269,157,494 or 21.1% of the Company’s total assets were represented by “non-qualifying assets.”

(3)	In addition to the interest earned based on the stated interest rate of this loan, the Company is entitled to receive an additional interest amount on the “first out” tranche of the portfolio company’s first lien senior secured loans.

(4)	Holdings of Verus Financial, LLC common stock are through Verus Holdings LLC, a special purpose vehicle.

(5)	Fair value was reduced by 50% to represent the Company’s obligation to sell 50% of this investment back to Quantum for a nominal amount.

(6)

(7)	Non-income producing.

LIBOR—London Interbank Offered Rate, generally 1-Month or 3-Month

Prime—Prime Rate

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $123,170,342 and $388,281,120, respectively, for the year ended December 31, 2018. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments.


Country Breakdown of Portfolio
United States	99.3	%
Canada	0.7	%

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING LLC

Consolidated Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)


	As of September 30, 2019 (unaudited)			As of December 31, 2018
Assets
Investments, at fair value
Non-controlled/non-affiliated investments (amortized cost of $881,354 and $935,510, respectively)	$	793,225		$	865,957
Controlled affiliated investments (cost of $235,200)		247,499			260,252
Cash and cash equivalents		191,123			145,912
Interest receivable		5,026			6,219
Deferred financing costs		1,353			3,260
Receivable from Adviser		264			263
Receivable for investments sold		80			—
Prepaid and other assets		—			85

Total Assets	$	1,238,570		$	1,281,948

Liabilities
Credit facility payable	$	364,000		$	365,000
Management fees payable		2,152			2,504
Directors’ fees payable		203			—
Interest and credit facility expense payable		166			151
Unrealized depreciation on unfunded commitments		32			169
Other accrued expenses and other liabilities		561			581

Total Liabilities	$	367,114		$	368,405

Commitments and Contingencies (Note 5)
Members’ Capital
Common Unitholders’ commitment: (20,134,698 units issued and outstanding)	$	2,013,470		$	2,013,470
Common Unitholders’ undrawn commitment: (20,134,698 units issued and outstanding)		(409,125	)		(409,125	)
Common Unitholders’ return of capital		(696,130	)		(614,130	)
Common Unitholders’ offering costs		(853	)		(853	)
Accumulated Common Unitholders’ tax reclassification		(9,480	)		(9,480	)

Common Unitholders’ capital		897,882			979,882
Accumulated loss		(26,426	)		(66,339	)

Total Members’ Capital	$	871,456		$	913,543

Total Liabilities and Members’ Capital	$	1,238,570		$	1,281,948

Net Asset Value Per Unit (accrual base) (Note 9)	$	63.60		$	65.69

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Operations (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Investment Income:
Interest income from non-controlled/non-affiliated investments	$	22,659		$	28,523		$	69,526		$	87,878
Interest income from non-controlled/non-affiliated investments paid-in-kind		4,432			5,537			10,992			13,931
Dividend income from non-controlled/non-affiliated investments		(2	)		181			53			181
Dividend income from controlled affiliated investments		—			(88	)		39,360			31,968
Other fee income from non-controlled/non-affiliated investments		51			—			640			—

Total investment income		27,140			34,153			120,571			133,958

Expenses:
Interest and credit facility expenses		4,264			5,507			13,902			19,688
Management fees		2,152			2,520			6,512			7,915
Administrative fees		262			287			788			908
Professional fees		156			274			592			826
Directors’ fees		78			70			243			229
Other expenses		(7	)		30			88			179

Total expenses		6,905			8,688			22,125			29,745

Expenses recaptured by the Adviser		—			8			—			—

Net expenses		6,905			8,696			22,125			29,745

Net investment income	$	20,235		$	25,457		$	98,446		$	104,213

Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on non-controlled/non-affiliated investments	$	86		$	293		$	(341	)	$	(252	)
Net realized gain distributions from controlled affiliated investments		—			88			—			931
Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments		12,140			(11,636	)		(18,439	)		(34,831	)
Net change in unrealized appreciation/depreciation on controlled affiliated investments		11,566			18,634			(12,753	)		3,263

Net realized and unrealized gain (loss) on investments	$	23,792		$	7,379		$	(31,533	)	$	(30,889	)

Net increase in Members’ Capital from operations	$	44,027		$	32,836		$	66,913		$	73,324

Basic and diluted:
Income per unit	$	2.19		$	1.63		$	3.32		$	3.64

See Notes to Consolidated Financial Statements

TCW DIRECT LENDING LLC

Consolidated Statements of Changes in Members’ Capital (Unaudited)

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital			Accumulated Earnings (Loss)			Total
Members’ Capital at December 31, 2017	$	1,300,269		$	(24,849	)	$	1,275,420
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			32,751			32,751
Net change in unrealized appreciation/depreciation on investments		—			(4,414	)		(4,414	)
Distributions to Members from:
Distributable earnings⁽¹⁾		—			(20,000	)		(20,000	)
Return of unused capital		(100,000	)		—			(100,000	)

Total (Decrease) Increase in Members’ Capital for the three months ended March 31, 2018		(100,000	)		8,337			(91,663	)

Members’ Capital at March 31, 2018	$	1,200,269		$	(16,512	)	$	1,183,757

Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			46,005			46,005
Net realized gain on investments		—			298			298
Net change in unrealized appreciation/depreciation on investments		—			(34,152	)		(34,152	)
Distributions to Members from:
Distributable earnings⁽²⁾		—			(98,250	)		(98,250	)

Total Decrease in Members’ Capital for the three months ended June 30, 2018		—			(86,099	)		(86,099	)

Members’ Capital at June 30, 2018	$	1,200,269		$	(102,611	)	$	1,097,658

Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			25,457			25,457
Net realized gain on investments		—			381			381
Net change in unrealized appreciation/depreciation on investments		—			6,998			6,998
Distributions to Members from:
Return of capital		(184,445	)		—			(184,445	)

Total (Decrease) Increase in Members’ Capital for the three months ended September 30, 2018		(184,445	)		32,836			(151,609	)

Members’ Capital at September 30, 2018	$	1,015,824		$	(69,775	)	$	946,049

(1)	The Company distributed $20,000 from net investment income during the three months ended March 31, 2018.

(2)	The Company distributed 98,250 from net investment income during the three months June 30, 2018.

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Changes in Members’ Capital (Unaudited)

(Dollar amounts in thousands, except unit data)


	Common Unitholders’ Capital			Accumulated Earnings (Loss)			Total
Members’ Capital at December 31, 2018	$	979,882		$	(66,339)		$	913,543
Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			41,243			41,243
Net realized loss on investments		—			(580	)		(580	)
Net change in unrealized appreciation/depreciation on investments		—			(19,221	)		(19,221	)
Distributions to Members from:
Distributable earnings		—			(15,000	)		(15,000	)
Return of capital		(82,000	)		—			(82,000	)

Total (Decrease) Increase in Members’ Capital for the three months ended March 31, 2019		(82,000	)		6,442			(75,558	)

Members’ Capital at March 31, 2019	$	897,882		$	(59,897	)	$	837,985

Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			36,968			36,968
Net realized gain on investments		—			153			153
Net change in unrealized appreciation/depreciation on investments		—			(35,677	)		(35,677	)
Distributions to Members from:
Distributable earnings		—			(12,000	)		(12,000	)

Total Decrease in Members’ Capital for the three months ended June 30, 2019		—			(10,556	)		(10,556	)

Members’ Capital at June 30, 2019	$	897,882		$	(70,453	)	$	827,429

Net Increase (Decrease) in Members’ Capital Resulting from Operations:
Net investment income		—			20,235			20,235
Net realized gain on investments		—			86			86
Net change in unrealized appreciation/depreciation on investments		—			23,706			23,706

Total Increase in Members’ Capital for the three months ended September 30, 2019		—			44,027			44,027

Members’ Capital at September 30, 2019	$	897,882		$	(26,426	)	$	871,456

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands, except unit data)


	For the nine months ended September 30, 2019			For the nine months ended September 30, 2018
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	66,913		$	73,324
Adjustments to reconcile the net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(35,789	)		(83,796	)
Interest income paid-in-kind		(10,992	)		(13,931	)
Proceeds from sales and paydowns of investments		104,947			194,037
Net realized loss on investments		341			252
Net change in unrealized appreciation/depreciation on investments		31,192			31,568
Amortization of premium and accretion of discount, net		(4,351	)		(6,171	)
Amortization of deferred financing costs		1,907			4,808
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in interest receivable		1,193			3,784
(Increase) decrease in receivable for investments sold		(80	)		—
(Increase) decrease in receivable from Adviser		(1	)		530
(Increase) decrease in prepaid and other assets		85			8
Increase (decrease) in interest and credit facility expense payable		15			(164	)
Increase (decrease) in management fees payable		(352	)		—
Increase (decrease) in directors’ fees payable		203			176
Increase (decrease) in other accrued expenses and liabilities		(20	)		93

Net cash provided by operating activities	$	155,211		$	204,518

Cash Flows from Financing Activities
Unused contributions returned to Members	$	—			(100,000	)
Return of capital		(82,000	)		—
Distributions to Members		(27,000	)		(302,695	)
Proceeds from credit facility		115,000			227,000
Repayments of credit facility		(116,000	)		(170,000	)

Net cash used in financing activities	$	(110,000	)	$	(345,695	)

Net increase (decrease) in cash and cash equivalents	$	45,211		$	(141,177	)
Cash and cash equivalents, beginning of period	$	145,912		$	209,784

Cash and cash equivalents, end of period	$	191,123		$	68,607

Supplemental and non-cash financing activities
Interest expense paid	$	11,583		$	11,422

See Notes to Consolidated Financial Statements.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

1. Organization and Basis of Presentation

Organization: TCW Direct Lending LLC (“Company”) was formed as a Delaware corporation on March 20, 2014 and converted to a Delaware limited liability company on April 1, 2014. The Company conducted a private offering of its limited liability company units (the “Common Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). In addition, the Company may issue preferred units, though it currently has no intention to do so. The Company has engaged TCW Asset Management Company LLC (“TAMCO”), an affiliate of The TCW Group, Inc. (“TCW”) to be its adviser (the “Adviser”). On May 13, 2014 (“Inception Date”), the Company sold and issued 10 Common Units at an aggregate purchase price of $1 to TAMCO.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company has also elected to be treated for U.S. federal income tax purposes as a Regulated Investment Company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”) for the taxable year ending December 31, 2015 and subsequent years. The Company is required to meet the minimum distribution and other requirements for RIC qualification and as a BDC and a RIC, the Company is required to comply with certain regulatory requirements.

Throughout 2017, the Company formed several Delaware limited liability companies, all of which have a single member interest owned by the Company.

In 2018, the Company cancelled all but two of its wholly-owned Delaware limited liability companies. Further, TCW Direct Lending Luxembourg, a private limited liability company organized under the laws of Luxembourg and originally established in 2016 as a wholly-owned subsidiary, was also dissolved and the Company’s interest in the subsidiary was terminated.

In January 2019, the Company established a wholly-owned subsidiary, TCW DL CTH LLC, a Delaware limited liability company, designed to hold one of the Company’s equity investments.

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Term: The term of the Company will continue until the sixth anniversary of the Initial Closing Date (as defined below), September 14, 2020 unless extended or sooner dissolved as provided in the limited liability agreement or by operation of law. The Company may extend the term for two additional one-year periods upon written notice to the holders of the Common Units and holders of preferred units, if any, (collectively the “Unitholders” or “Members”) at least 90 days prior to the expiration of the term or the end of the first one-year period. Thereafter, the term may be extended for successive one-year periods, with the vote or consent of a supermajority in interest of the holders of the Common Units.

Commitment Period: The Commitment Period commenced on September 19, 2014 (the “Initial Closing Date”) and ended on September 19, 2017, the third anniversary of the Initial Closing Date. In accordance with the Company’s Limited Liability Company Agreement, the Company may complete investment transactions that were significantly in process as of the end of the Commitment Period and which the Company reasonably expects to be consummated prior to 90 days subsequent to the expiration date of the Commitment Period. The Company may also effect follow-on investments up to an aggregate maximum of 10% of Capital Commitments (as defined below), provided that any such follow-on investment to be made after the third anniversary of the expiration of the Commitment Period shall require the prior consent of a majority in interest of the Common Unitholders.

Capital Commitments: On September 19, 2014 (“the Initial Closing Date”), the Company began accepting subscription agreements from investors for the private sale of its Common Units. On March 19, 2015, the Company completed its final private placement of its Common Units. Subscription agreements with commitments (“Commitments”) from investors (each a “Common Unitholder”) totaling $2,013,470 for the purchase of Common Units were accepted. Each Common Unitholder is obligated to contribute capital equal to their Commitment and each Unit’s Commitment obligation is $100.00 per unit. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment”.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

1. Organization and Basis of Presentation (Continued)

The commitment amount funded does not include amounts contributed in anticipation of a potential investment that the Company did not consummate and therefore returned to the Members’ as unused capital. As of September 30, 2019, aggregate Commitments, Undrawn Commitments, the percentage of Commitments funded and the number of subscribed for Units of the Company were as follows:


	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	409,125		79.7	%		20,134,698

Recallable Amount: A Common Unitholder may be required to re-contribute amounts distributed equal to 75% of the principal amount or the cost portion of any Portfolio Investment that is fully repaid to or otherwise fully recouped by the Company within one year of the Company’s investment. The Recallable Amount is excluded from the calculation of the accrual based net asset value.

The Recallable Amount as of September 30, 2019 was $100,875.

2. Significant Accounting Policies

Basis of Presentation: The consolidated financial statements of the Company were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies (“ASC 946”). The Company has consolidated the results of its wholly owned subsidiary in its consolidated financial statements in accordance with ASC 946.

Use of Estimates: The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the reported amounts of income and expenses during the years presented and (iii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates, and such differences could be material.

Investments: The Company measures the value of its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosure (“ASC 820”). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity.

Transactions: The Company records investment transactions on the trade date. The Company considers trade date for investments not traded on a recognizable exchange, or traded in the over-the-counter markets, to be the date on which the Company receives legal or contractual title to the asset and bears the risk of loss.

Income Recognition: Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. The Company typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, using the effective-interest method assuming there are no questions as to collectability, and reflected in the amortized cost basis of the investment. Discounts associated with a revolver as well as fees associated with a delayed draw that remains unfunded are treated as a discount to the issuers’ term loan. Ongoing facility, commitment or other additional fees including, prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

Deferred Financing Costs: Deferred financing costs incurred by the Company in connection with the revolving credit facility, including arrangement fees, upfront fees and legal fees, are amortized on a straight-line basis over the term of the revolving credit facility.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

2. Significant Accounting Policies (Continued)

Organization and Offering Costs: Costs incurred to organize the Company totaling $665 were expensed as incurred. Offering costs totaling $853 were accumulated and charged directly to Members’ Capital on March 19, 2015, the end of the period during which Common Units were offered (the “Closing Period”). The Company did not bear more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses.

Cash and Cash Equivalents: The Company considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. As of September 30, 2019, cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less. Cash equivalents are carried at amortized costs which approximates fair value, and are classified as Level 1 in the GAAP valuation hierarchy

Income Taxes: So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. Federal income taxes on any ordinary income or capital gains that it distributes at least annually to its Members as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s Members and will not be reflected in the consolidated financial statements of the Company.

Recent Accounting Pronouncements: In October 2016, the U.S. Securities and Exchange Commission (“SEC”) adopted new rules and amended existing rules (together, the “Final Rules”) intended to modernize the reporting and disclosure of information by registered investment companies and BDCs. In part, the Final Rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017, and the Company has implemented the applicable requirements into this report, namely the separate disclosure of PIK interest income on the Consolidated Statements of Operations and disclosure of realized gains/(losses) on controlled affiliated investments.

On May 28, 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this Update supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition–Construction-Type and Production-Type Contracts. This update is effective for fiscal years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities. The amendments in this update makes improvements to the requirements for accounting for equity investments and simplify the impairment assessment of equity investments. For public entities this update is effective for fiscal years beginning after December 15, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instrument—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update provide a variety of technical corrections and improvements to how entities should account for financial instruments and shorten the amortization period for certain callable debt securities held at premium. For public entities, this update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years beginning after June 15, 2018. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

On August 17, 2018, the SEC issued a final rule that reduces or eliminates certain disclosure requirements under Regulation S-X, and expands others. This final rule is effective for the Company beginning January 1, 2018. As a result of this final rule, the Company has presented in its Consolidated Statement of Assets and Liabilities its total accumulated earnings (loss), rather than its components.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

2. Significant Accounting Policies (Continued)

On August 28, 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance modifies the disclosure requirements on fair value measurements by (1) removing certain disclosure requirements including policies related to valuation processes and the timing of transfers between levels of the fair value hierarchy, (2) amending disclosure requirements related to measurement uncertainty from the use of significant unobservable inputs, and (3) adding certain new disclosure requirements including changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods therein, with early adoption permitted. As permitted by the ASU, the Company early adopted the following applicable provisions of the ASU:

•

removed the Company’s disclosure of policy for timing of transfers between levels;

•

removed the disclosure describing the Company’s valuation process for Level 3 fair value measurements;

•

for investments measured using net asset values, disclosed (1) the timing of liquidation of an investee’s assets and (2) the date when redemption restrictions will lapse, to the extent that such information has been publicly announced by the investee; and

•

disclosed information about the uncertainty of Level 3 fair value measurements as of the reporting date, rather than at a point in the future.

The Company is currently evaluating the effect of additional disclosures prescribed by this ASU on its consolidated financial statements.

3. Investment Valuations and Fair Value Measurements

Investments at Fair Value: Investments held by the Company are valued at fair value. Fair value is generally determined on the basis of last reported sales prices or official closing prices on the primary exchange in which each security trades, or if no sales are reported, based on the midpoint of the valuation range obtained for debt investments from a quotation reporting system, established market makers or pricing service.

Investments for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by the Board of Directors (the “Board”) based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified into three levels by the Company based on valuation inputs used to determine fair value:

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect the Company’s determination of assumptions that market participants might reasonably use in valuing the assets.

Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in those securities.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level 1), include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Equity, (Level 1), includes common stock valued at the closing price on the primary exchange in which the security trades.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

3. Investment Valuations and Fair Value Measurements (Continued)

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine the fair value of investments in private debt and equity for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), include investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach incorporating a weighted average cost of capital is generally used to determine fair value or, in some cases, an enterprise value waterfall method. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Equity, (Level 3), include common stock and warrants. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. When a Black-Scholes pricing model is used it follows the income approach. The pricing model takes into account the contract terms as well as multiple inputs, including: time value, implied volatility, equity prices and interest rates. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized from sales or other dispositions of investments.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (Strategic Ventures) are valued based on the NAV reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additional one-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additional one-year periods, upon notice to and consent from the fund’s management committee. The Company is entitled to income and principal distributed by the fund.

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of September 30, 2019:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	768,518	$	—	$	768,518
Equity		2,234		—		22,473		—		24,707
Investment Funds & Vehicles⁽¹⁾		—		—		—		247,499		247,499
Cash equivalents		162,697		—		—		—		162,697

Total Assets	$	164,931	$	—	$	790,991	$	247,499	$	1,203,421

⁽¹⁾

Includes equity investments in Strategic Ventures. In accordance with ASC Topic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

3. Investment Valuations and Fair Value Measurements (Continued)

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Consolidated Schedule of Investments as of December 31, 2018:


Investments	Level 1		Level 2		Level 3		NAV		Total
Debt	$	—	$	—	$	854,564	$	—	$	854,564
Equity		784		—		10,608		—		11,392
Investment Funds & Vehicles⁽¹⁾		—		—		—		260,252		260,252
Cash equivalents		73,675		—		—		—		73,675

Total Assets	$	74,459	$	—	$	865,172	$	260,252	$	1,199,883

⁽¹⁾

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three and nine months ended September 30, 2019:


	Debt			Equity		Total
Balance, July 1, 2019	$	798,719		$	12,598	$	811,317
Purchases*		20,844			1,693		22,537
Sales and paydowns of investments		(55,819	)		—		(55,819	)
Amortization of premium and accretion of discount, net		1,945			—		1,945
Net realized gains		86			—		86
Net change in unrealized appreciation/depreciation		2,743			8,182		10,925

Balance, September 30, 2019	$	768,518		$	22,473	$	790,991

Change in net unrealized appreciation/depreciation in investments held as of September 30, 2019	$	4,817		$	8,183	$	13,000

*	Includes payments received in-kind


	Debt			Equity			Total
Balance, January 1, 2019	$	854,564		$	10,608		$	865,172
Purchases*		45,077			2,407			47,484
Sales and paydowns of investments		(105,650	)		—			(105,650	)
Amortization of premium and accretion of discount, net		4,351			—			4,351
Net realized gains (losses)		255			(596	)		(341	)
Net change in unrealized appreciation/depreciation		(30,079	)		10,054			(20,025	)

Balance, September 30, 2019	$	768,518		$	22,473		$	790,991

Change in net unrealized appreciation/depreciation in investments held as of September 30, 2019	$	(22,273	)	$	10,086		$	(12,187	)

*	Includes payments received in-kind

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

3. Investment Valuations and Fair Value Measurements (Continued)

The following tables provide a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three and nine months ended September 30, 2018:


	Debt			Equity			Total
Balance, July 1, 2018	$	1,023,719		$	16,128		$	1,039,847
Purchases*		21,459			853			22,312
Sales and paydowns of investments		(33,204	)		—			(33,204	)
Amortization of premium and accretion of discount, net		1,649			—			1,649
Net realized gains		293			—			293
Net change in unrealized appreciation/depreciation		(8,964	)		(1,257	)		(10,221	)

Balance, September 30, 2018	$	1,004,952		$	15,724		$	1,020,676

Change in net unrealized appreciation/depreciation in investments held as of September 30, 2018	$	(22,308)		$	(1,240)		$	(23,548)

*	Includes payments received in-kind


	Debt			Equity			Total
Balance, January 1, 2018	$	1,151,532		$	10,851		$	1,162,383
Purchases*		72,720			10,583			83,303
Sales and paydowns of investments		(197,364	)		(685	)		(198,049	)
Amortization of premium and accretion of discount, net		6,170			—			6,170
Net realized losses		(252	)		—			(252	)
Net change in unrealized appreciation/depreciation		(27,854	)		(5,025	)		(32,879	)

Balance, September 30, 2018	$	1,004,952		$	15,724		$	1,020,676

Change in net unrealized appreciation/depreciation in investments held as of September 30, 2018	$	(45,774)		$	(5,008)		$	(50,782)

*	Includes payments received in-kind

During the three and nine months ended September 30, 2019 and 2018, the Company did not have any transfers between levels.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

3. Investment Valuations and Fair Value Measurements (Continued)

Level 3 Valuation and Quantitative Information: The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of September 30, 2019.

Investment
Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average

Valuation from
an Increase
in Input

Debt

618,686

Income Method

Discount Rate

5.9% to 19.8%

11.2%

Decrease

Debt

100,939

Market Method

EBITDA Multiple

Revenue Multiple

5.5x to 8.3x 0.2x to 2.4x

N/A N/A

Increase Increase

Debt

40,624

Income Method

Take-Out Indication

Discount Rate

100.0% to 103.0% 15.4% to 15.4%

101.5% 15.4%

Increase Decrease

Debt

8,269

Income Method Market Method

Discount Rate

EBITDA Multiple

15.8% to 19.5% 3.8x to 4.8x

17.9% N/A

Decrease Increase

Equity

13,077

Income Method

Implied Volatility

Risk Free Rate

Expected Term (in years)

35.0% to 69.3% 1.6% to 1.8% 1.0 to 2.0

69.2% 1.7% 1.0

Increase Increase Increase

Equity

9,396

Market Method

EBITDA Multiple

Revenue Multiple

4.5x to 12x 0.2x to 0.2x

N/A N/A

Increase Increase

The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2018.

Investment
Type

Fair Value

Valuation
Technique

Unobservable

Input

Range

Weighted
Average

Impact to
Valuation
from an
Increase
in Input

Debt

796,731

Income Method

Discount Rate

6.8% to 19.9%

11.9%

Decrease

Debt

41,258

Market Method

EBITDA Multiple

Revenue Multiple

5.7x to 8.2x 2.8x to 3.0x

N/A N/A

Increase Increase

Debt

16,575

Income Method Market Method

Discount Rate

EBITDA Multiple

17.8% to 30.0% 4.5x to 9.0x

22.8% N/A

Decrease Increase

Equity

1,333

Income Method

Implied Volatility

Risk Free Rate

Expected Term (in years)

25.0% to 69.0% 2.4% to 2.5% 0.1 to 2.0

68.1% 2.4% 0.1

Increase Increase Increase

Equity

9,275

Market Method

EBITDA Multiple

4.5x to 12.5x

N/A

Increase

Unless noted, the Company is utilizing the midpoint of a valuation range provided by an external, independent valuation firm.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

4. Agreements and Related Party Transactions

Advisory Agreement: On September 15, 2014, the Company entered into an Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, its registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement was approved by the Board at an in-person meeting. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of two years and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board.

Management Fee: Pursuant to the Advisory Agreement, and subject to the overall supervision of the Board, the Adviser will manage the Company’s day-to-day operations and provide investment advisory services to the Company. The Company will pay to the Adviser, quarterly in advance, a management fee (the “Management Fee”) calculated as follows: (i) for the period starting on the initial closing date and ending on the earlier of (A) the last day of the calendar quarter during which the Commitment Period (as defined below) ends or (B) the last day of the calendar quarter during which the Adviser or an affiliate thereof begins to accrue a management fee with respect to a successor fund, 0.375% (i.e., 1.50% per annum) of the aggregate commitments determined as of the end of the Closing Period, and (ii) for each calendar quarter thereafter during the term of the Company (but not beyond the tenth anniversary of the initial closing date), 0.1875% (i.e., 0.75% per annum) of the aggregate cost basis (whether acquired by the Company with contributions from members, other Company funds or borrowings) of all portfolio investments that have not been sold, distributed to the members, or written off for tax purposes (but reduced by any portion of such cost basis that has been written down to reflect a permanent impairment of value of any portfolio investment), determined in each case as of the first day of such calendar quarter. The Management Fee in respect of the Closing Period will be calculated as if all capital commitments of the Company were made on the initial closing date, regardless of when Common Units were actually funded. The actual payment of the Management Fee with respect to the Closing Period will not be made prior to the first day of the first full calendar quarter following the end of the Closing Period. The “Commitment Period” of the Company will begin on the initial closing date and end on the earlier of (a) three years from the initial closing date and (b) the date on which the undrawn Commitment of each Common Unit has been reduced to zero. While the Management Fee will accrue from the initial closing date, the Adviser intends to defer payment of such fees to the extent that such fees cannot be paid from interest and fee income generated by the Company’s investments.

For the three and nine months ended September 30, 2019, Management Fees incurred amounted to $2,152 and $6,512, respectively, of which $2,152 remained payable at September 30, 2019. For the three and nine months ended September 30, 2018, Management Fees incurred amounted to $2,520 and $7,915, respectively, of which $0 remained payable at September 30, 2018.

Transaction and Other Fees: Any (i) transaction, advisory, consulting, management, monitoring, directors’ or similar fees, (ii) closing, investment banking, finders’, transaction or similar fees, (iii) commitment, breakup or topping fees or litigation proceeds and (iv) other fee or payment of services performed or to be performed with respect to an investment or proposed investment received from or with respect to Portfolio Companies or prospective Portfolio Companies in connection with the Company’s activities will be will be the property of the Company.

Since inception, the Company received $2,615 in such fees, of which $51 and $1,788, were paid during the three and nine months ended September 30, 2019, respectively. No such fees were received during the three and nine months ended September 30, 2018.

Incentive Fee: In addition, the Adviser will receive an incentive fee (the “Incentive Fee”) as follows:

(a) First, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions pursuant to this clause (a) equal to their aggregate capital contributions in respect of all Common Units;

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

4. Agreements and Related Party Transactions (Continued)

(b) Second, no Incentive Fee will be owed until the Common Unitholders have collectively received cumulative distributions equal to a 9% internal rate of return on their aggregate capital contributions in respect of all Common Units (the “Hurdle”);

(c) Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to Common Unitholders until such time as the cumulative Incentive Fee paid to the Adviser is equal to 20% of the sum of (i) the amount by which the Hurdle exceeds the aggregate capital contributions of the Common Unitholders in respect of all Common Units and (ii) the amount of Incentive Fee being paid to the Adviser pursuant to this clause (c); and

(d) Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to Unitholders, with the remaining 80% distributed to the Unitholders.

The Incentive Fee will be calculated on a cumulative basis and the amount of the Incentive Fee payable in connection with any distribution (or deemed distribution) will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the Unitholders.

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) our terminating the agreement for cause (as set out in the Advisory Agreement), we will be required to pay the Adviser a final incentive fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Advisory Agreement is so terminated and will equal the amount of Incentive Fee that would be payable to the Adviser if (A) all our investments were liquidated for their current value (but without taking into account any unrealized appreciation of any portfolio investment), and any unamortized deferred portfolio investment-related fees would be deemed accelerated, (B) the proceeds from such liquidation were used to pay all our outstanding liabilities, and (C) the remainder were distributed to Unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. We will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated. The Adviser Return Obligation (defined below) will not apply in connection with a Final Incentive Fee Payment.

For the three and nine months ended September 30, 2019 and 2018, no Incentive Fees were incurred.

Administration Agreement: On September 15, 2014, the Company entered into the Administration Agreement with the Adviser under which the Adviser (or one or more delegated service providers) will oversee the maintenance of our financial records and otherwise assist on the Company’s compliance with regulations applicable to a BDC under the 1940 Act, and a RIC under the Code, to prepare reports to our Members, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provide us with administrative and back office support. The Company will reimburse the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

The Company, and indirectly the Unitholders, will bear (including by reimbursing the Adviser or Administrator) all other costs and expenses of its operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of the Company’s counsel and accounting fees. However, the Company will not bear (a) more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments of the Company per annum (pro-rated for partial years) for its costs and expenses other than ordinary operating expenses (“Company Expenses”), including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser. All expenses that the Company will not bear will be borne by the Adviser or its affiliates. Notwithstanding the foregoing, the cap on Company Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts payable in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to the liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments).

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

4. Agreements and Related Party Transactions (Continued)

TCW Direct Lending Strategic Ventures LLC: On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Direct Lending Strategic Ventures LLC (“Strategic Ventures”). Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement was effective June 5, 2015. The Company’s investment in Strategic Ventures is restricted from redemption until the termination of Strategic Ventures.

The Company’s capital commitment is $481,600, representing approximately 80% of the preferred and common equity ownership of Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to Strategic Ventures. Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015.

The Company’s investments in controlled affiliated investments as of and transactions during the nine months ended September 30, 2019 were as follows:


	Fair Value as of January 1, 2019		Purchases		Sales		Change in Unrealized Gains and (Losses)			Fair Value as of September 30, 2019		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	260,252	$	—	$	—	$	(12,753	)	$	247,499	$	39,360	$	—

Total Controlled Affiliates	$	260,252	$	—	$	—	$	(12,753	)	$	247,499	$	39,360	$	—

The Company’s investments in controlled affiliated investments as of and transactions during the year ended December 31, 2018 were as follows:


	Fair Value as of January 1, 2018		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2018		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	259,698	$	21,600	$	(25,954	)	$	4,908	$	260,252	$	31,968	$	931

Total Controlled Affiliates	$	259,698	$	21,600	$	(25,954	)	$	4,908	$	260,252	$	31,968	$	931

For the nine months ended September 30, 2019 and year ended December 31, 2018, the Company did not recognize any realized gains (losses) on controlled affiliated investments. During the nine months ended September 30, 2019 and the year ended December 31, 2018, the Company recognized nil and $931, respectively, of net realized gain distributions from TCW Strategic Ventures.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized losses by investment as of September 30, 2019 and December 31, 2018:


	Maturity/ Expiration		September 30, 2019				December 31, 2018
Unfunded Commitments	Maturity/ Expiration		Amount		Unrealized Losses		Amount		Unrealized Losses
Ascensus Specialties, LLC (fka Vertellus Performance Chemicals LLC)		September 2022	$	—	$	—	$	4,218	$	8
Guardia LLC (fka Carrier & Technology Solutions, LLC)		July 2023		2,559		—		2,656		—
ENA Holding Corporation		May 2021		—		—		1,601		45
FQSR, LLC		May 2023		6,243		—		4,566		73
Help At Home, LLC		August 2020		14,865		—		14,865		—
Quicken Parent Corp.		April 2021		863		32		862		43
Ruby Tuesday, Inc.		December 2022		4,575		—		4,575		—

Total			$	29,105	$	32	$	33,343	$	169

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of September 30, 2019, the Company’s unfunded commitment to Strategic Ventures is $219,646.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As of September 30, 2019, management is not aware of any pending or threatened litigation.

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

6. Members’ Capital

During the three and nine months ended September 30, 2019 and 2018, the Company did not sell or issue any Common Units. The activity for the three and nine months ended September 30, 2019 and 2018 was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Units at beginning of period		20,134,698		20,134,698		20,134,698		20,134,698

Units issued and committed at end of period		20,134,698		20,134,698		20,134,698		20,134,698

The Company did not process any deemed distributions and re-contributions during the three and nine months ended September 30, 2019 and 2018.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

7. Credit Facility

The Company has a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750,000 (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

On April 10, 2017, the Company and Natixis entered into a Third Amended and Restated Revolving Credit Agreement. Under the Third Amended and Restated Revolving Credit Agreement borrowings bear interest at a rate equal to either the (a) adjusted eurodollar rate calculated in a customary manner plus 2.35%, (b) commercial paper rate plus 2.35%, or (c) a base rate calculated in a customary manner (using the higher of the Federal Funds Rate plus 0.50%, the Prime Rate and the Floating LIBOR Rate plus 1.00%) plus 1.35%. Moreover, the Credit Agreement’s stated maturity date was extended from November 10, 2017 to April 10, 2020. The Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of September 30, 2019, the Company was in compliance with such covenants.

As of September 30, 2019 and December 31, 2018, the Available Commitment under the Third Amended and Restated Revolving Credit Agreement is $397,000 and $500,000, respectively.

As of September 30, 2019 and December 31, 2018, the amounts outstanding under the Credit Facility were $364,000 and $365,000, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of September 30, 2019 and December 31, 2018, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and conditions of the Credit Facility. The Company incurred financing costs of $10,123 in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. The Company recorded these costs as deferred financing costs on its Consolidated Statements of Asset and Liabilities and are being amortized over the life of the Credit Facility. As of September 30, 2019 and December 31, 2018, $1,353 and $3,260, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the three and nine months ended September 30, 2019 and 2018 was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Credit facility interest expense	$	3,483		$	4,761		$	11,578		$	11,508
Undrawn commitment fees		122			87			368			3,323
Administrative fees		17			16			49			49
Amortization of deferred financing costs		642			643			1,907			4,808

Total	$	4,264		$	5,507		$	13,902		$	19,688

Weighted average interest rate		4.56	%		4.49	%		4.76	%		4.31	%
Average outstanding balance		299,098			414,848			320,850			352,223

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

8. Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act and has elected to be treated as a RIC under the Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its common unitholders as dividends. The Company elected to be taxed as a RIC in 2015. The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

Federal Income Taxes: It is the policy of the Company to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of its net taxable income and any net realized gains on investments to its shareholders. Therefore, no federal income tax provision is required.

As of September 30, 2019 and December 31, 2018, the Company’s aggregate investment unrealized appreciation and depreciation on investments, for federal income tax purposes, was as follows:


	September 30, 2019		December 31, 2018
Cost of investments for federal income tax purposes	$	1,279,282	$	1,264,745
Unrealized appreciation	$	24,941	$	31,987
Unrealized depreciation	$	100,802	$	96,848
Net unrealized depreciation on investments	$	75,861	$	64,861

The Company did not have any unrecognized tax benefits at December 31, 2018, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; and therefore no interest or penalties were accrued. The Company is subject to examination by U.S. federal and state tax authorities regarding returns filed for the prior three and five years, respectively. An examination of the Company’s 2015 federal tax return was concluded in 2017. No adjustments were proposed.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amounts in thousands, except for unit data)

September 30, 2019

9. Financial Highlights

Selected data for a unit outstanding throughout the nine months ended September 30, 2019 and 2018 is presented below. The accrual base Net Asset Value is calculated by subtracting the per unit loss from investment operations from the beginning Net Asset Value per unit and reflects all units issued and outstanding.


	For the Nine Months Ended September 30,
	2019			2018
Net Asset Value Per Unit (accrual base), Beginning of Period	$	65.69		$	78.70
Income from Investment Operations:
Net investment income⁽¹⁾		4.89			5.18
Net realized and unrealized loss		(1.57	)		(1.54	)

Total from investment operations		3.32			3.64
Less Distributions:
From net investment income		(1.34	)		(5.87	)
Return of capital		(4.07	)		(9.16	)

Total distributions⁽²⁾		(5.41	)		(15.03	)

Net Asset Value Per Unit (accrual base), End of Period	$	63.60		$	67.31

Common Unitholder Total Return⁽³⁾⁽⁴⁾		8.1	%		6.7	%

Common Unitholder IRR⁽⁵⁾		8.1	%		7.4	%

Ratios and Supplemental Data
Members’ Capital, end of period	$	871,456		$	946,049
Units outstanding, end of period		20,134,698			20,134,698
Ratios based on average net assets of Members’ Capital:
Ratio of total expenses to average net assets⁽⁶⁾		3.47	%		3.54	%
Expenses reimbursed by Investment Adviser⁽⁶⁾		—	%		—	%
Ratio of net expenses to average net assets⁽⁶⁾		3.47	%		3.52	%
Ratio of financing cost to average net assets⁽⁴⁾		1.63	%		1.75	%
Ratio of net investment income to average net assets⁽⁶⁾		15.46	%		12.39	%
Ratio of net investment income (loss) to average net assets⁽⁶⁾		15.46	%		12.39	%
Credit facility payable	$	364,000		$	435,000
Asset coverage ratio		3.4			3.2
Portfolio turnover rate⁽⁴⁾		3.0	%		6.0	%

⁽¹⁾	Per unit data was calculated using the number of Common Units issued and outstanding as of September 30, 2019 and 2018.

⁽²⁾	Includes distributions which have an offsetting capital re-contribution (“deemed distributions”). Excludes return of unused capital.

⁽³⁾	The Total Return for the nine months ended September 30, 2019 and 2018 was calculated by taking the net investment income (loss) of the Company for the period divided by the weighted average capital contributions from the Members during the period. The return is net of management fees and expenses.

⁽⁴⁾	Not annualized.

⁽⁵⁾

The Internal Rate of Return (IRR) since inception for the Common Unitholders, after management fees, financing costs and operating expenses is 8.1% through September 30, 2019. The IRR is computed based on cash flow due dates contained in notices to Members (contributions from and distributions to the Common Unitholders) and the net assets (residual value) of the Members’ Capital account at period end. The IRR is calculated based on the fair value of investments using principles and methods in accordance with GAAP and does not necessarily represent the amounts that may be realized from sales or other dispositions. Accordingly, the return may vary significantly upon realization.

⁽⁶⁾	Annualized.

TCW DIRECT LENDING LLC

Notes to Consolidated Financial Statements (Unaudited) (Continued)

(Dollar amount in thousands, except for unit data)

September 30, 2019

10. Subsequent Events

The Company has evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that require recognition or disclosure in these consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report on Form 10-Q. Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or future performance or financial condition of TCW Direct Lending LLC. For simplicity, this report uses the terms “Company,” “we,” “us,” and “our” to include TCW Direct Lending LLC and where appropriate in the context, its wholly-owned subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward- looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation:

•

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

•

a contraction of available credit could impair our lending and investment activities;

•

interest rate volatility could adversely affect our results, particularly when we are using leverage as part of our investment strategy;

•

our future operating results;

•

our business prospects and the prospects of our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

the ability of our portfolio companies to achieve their financial and other business objectives;

•

competition with other entities and our affiliates for investment opportunities;

•

uncertainty surrounding the financial stability of the United States, Europe and China;

•

the social, geopolitical, financial, trade and legal implications of Brexit;

•

an inability to replicate the historical success of any previously launched fund managed by the direct lending team of our investment adviser, TCW Asset Management Company LLC (the “Adviser”);

•

the speculative and illiquid nature of our investments;

•

the use of borrowed money to finance a portion of our investments;

•

the adequacy of our financing sources and working capital;

•

the costs associated with being an entity registered with the Securities Exchange Commission (“SEC”);

•

the loss of key personnel;

•

the timing of cash flows, if any, from the operations of our portfolio companies;

•

the ability of the Adviser to monitor and administer our investments;

•

the ability of The TCW Group, Inc. and its subsidiaries to attract and retain highly talented professionals that can provide services to the Adviser in its capacity as our investment adviser and administrator;

•

our ability to qualify and maintain our qualification as a regulated investment company, or “RIC,” under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” and as a business development company (“BDC”) under the Investment Company Act of 1940 and the related tax implications;

•

the effect of legal, tax and regulatory changes; and

•

the other risks, uncertainties and other factors we identify under “Part I—Item 1A. Risk Factors” in the Form 10-K that we filed with the SEC on March 19, 2019 and elsewhere in this report.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the 1934 Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward- looking statements in this report because we are an investment company.

Overview

We were formed on April 1, 2014 as a limited liability company under the laws of the State of Delaware. We have filed an election to be regulated as a BDC under the 1940 Act. We have also elected to be treated for U.S. federal income tax purposes as a RIC under the Code for the taxable year ending December 31, 2015 and subsequent years. We are required to continue to meet the minimum distribution and other requirements for RIC qualification. As such, we are required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

Each investor was required to enter into a subscription agreement in connection with its Commitment (a “Subscription Agreement”). Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Common Unitholders. Investors have entered into subscription agreements for 20,134,698 Common Units of the Company issued and outstanding representing a total of $2.013 billion of committed capital.

Throughout 2017, we formed several Delaware limited liability companies, all of which have a single member interest owned by us.

In 2018, we cancelled all but two of our wholly-owned Delaware limited liability companies. Further, TCW Direct Lending Luxembourg, a private limited liability company organized under the laws of Luxembourg and originally established in 2016 as a wholly-owned subsidiary, was also dissolved and our interest in the subsidiary was terminated.

In January 2019, we established a wholly-owned subsidiary, TCW DL CTH LLC, a Delaware limited liability company, designed to hold one of our equity investments.

Revenues

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. As our investment period has ended, we will not originate new loans, but may increase credit facilities to existing borrowers or affiliates. In general, we do not expect the Direct Lending Team to originate a significant amount of investments for us with payment-in-kind (“PIK”) interest features, although we may have investments with PIK interest features in limited circumstances. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, historically, our investment bias has been towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We also consider an equity investment as the primary security, in combination with a debt obligation, or as a part of total return strategy. Our investments are in corporations, partnerships or other business entities. Additionally, in certain circumstances, we may co-invest with other investors and/or strategic partners through indirect investments in portfolio companies through a joint venture vehicle, partnership or other special purpose vehicle (each, an “Investment Vehicle”). While we invest primarily in U.S. companies, there are certain instances where we invested in companies domiciled elsewhere.

Expenses

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided through the Administration Agreement and the Advisory Agreement.

We will bear (including by reimbursing the Adviser or Administrator) all costs and expenses of our operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of our counsel and accounting fees. However, we will not bear (a) more than an amount equal to

10 basis points of the aggregate Commitments for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments per annum (pro-rated for partial years) for our Operating Expenses, including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser and its affiliates. Notwithstanding the foregoing, the cap on Operating Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ.

In addition to the discussion below, our critical accounting policies are further described in Note 2 to the consolidated financial statements. We consider these accounting policies to be critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The critical accounting policies should be read in connection with our risk factors as disclosed in “Item 1A. Risk Factors.”

Investments at Fair Value

Investments which we hold for which market quotes are not readily available or are not considered reliable are valued at fair value and approved by our Board of Directors based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by us into three levels based on valuation inputs used to determine fair value.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect our determination of assumptions that market participants might reasonably use in valuing the assets.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level 1), include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Equity, (Level 1), includes common stock valued at the closing price on the primary exchange in which the security trades.

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine the fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Equity, (Level 3), include common stock. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A market approach is generally used to determine fair value. Pricing inputs include, but are not limited to, financial health and relevant business developments of the issuer; EBITDA; market multiples of comparable companies; comparable market transactions and recent trades or transactions; issuer, industry and market events; and contractual or legal restrictions on the sale of the security. A liquidity discount based on current market expectations, future events, minority ownership position and the period management reasonably expects to hold the investment may be applied.

Net Asset Value (“NAV”) (Investment Funds and Vehicles): Equity investments in affiliated investment fund (TCW Strategic Ventures) are valued based on the net asset value reported by the investment fund. Investments held by the affiliated fund include debt investments in privately originated senior secured debt. Such investments held by the affiliated fund are valued using the same methods, approach and standards applied above to debt investments held by the Company. The Company’s ability to withdraw from the fund is subject to restrictions. The term of the fund will continue until June 5, 2021 unless dissolved earlier or extended for two additional one-year periods by the Company, in its full discretion. The Company can further extend the term of the fund for additional one-year periods, upon notice to and consent from the funds management committee. The Company is entitled to income and principal distributed by the fund.

Investment Activity

As of September 30, 2019, our non-controlled/non-affiliated portfolio consisted of 22 debt and eight equity investments. Based on fair values as of September 30, 2019, our non-controlled/non-affiliated portfolio was 96.9% invested in debt investments which were mostly senior secured, first lien term loans and 3.1% invested in equity investments comprised of common and preferred stocks as well as warrants.

As of December 31, 2018, our non-controlled/non-affiliated portfolio consisted of 22 debt investments and five equity investments. Of these investments, 98.7% were debt investments which were primarily senior secured, first lien term loans and 1.3% were equity comprised of common and preferred stocks as well as warrants.

The table below describes our non-controlled/non-affiliated investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in industries as of September 30, 2019:


Industry	Percent of Total Investments
Hotels, Restaurants & Leisure		17	%
Food Products		13	%
Industrial Conglomerates		13	%
Metals & Mining		11	%
Information Technology Services		6	%
Auto Components		6	%
Health Care Providers & Services		6	%
Pharmaceuticals		5	%
Commercial Services & Supplies		5	%
Diversified Financial Services		5	%
Household Durables		3	%
Distributors		2	%
Software		2	%
Technologies Hardware, Storage and Peripherals		2	%
Internet & Direct Marketing Retail		2	%
Construction & Engineering		1	%
Textiles, Apparel & Luxury Goods		1	%

Total		100	%

Interest income from non-controlled/non-affiliated investments, including interest income paid-in-kind, was $27.1 million and $34.1 million for the three months ended September 30, 2019 and 2018, respectively. Interest income from non-controlled/non-affiliated investments, including interest income paid-in-kind, was $80.5 million and $101.8 million for the nine months ended September 30, 2019 and 2018, respectively.

Results of Operations

Our operating results for the three and nine months ended September 30, 2019 and 2018 were as follows (dollar amounts in thousands):


	For the three months ended September 30,					For the nine months ended September 30,
	2019		2018			2019			2018
Total investment income	$	27,140	$	34,153		$	120,571		$	133,958
Net expenses		6,905		8,696			22,125			29,745

Net investment income	$	20,235	$	25,457		$	98,446		$	104,213

Net realized gain (loss) on non-controlled/non-affiliated investments	$	86	$	293			(341	)		(252	)
Net realized gain distributions from affiliated investments		—		88			—			931
Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments		12,140		(11,636	)		(18,439	)		(34,831	)
Net change in unrealized appreciation/depreciation on controlled affiliated investments		11,566		18,634			(12,753	)		3,263

Net increase in Members’ Capital from operations	$	44,027	$	32,836		$	66,913		$	73,324

Total investment income

Total investment income for the three months ended September 30, 2019 and 2018 was $27.1 million and $34.2 million, respectively, and included interest income paid-in-kind from non-controlled/non-affiliated investments of $4.4 million and $5.5 million, respectively. The decrease in total investment income during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, was due mainly to lower interest income from our non-controlled/non-affiliated investments, reflecting the continued wind down of our investment operations since the expiration of our investment period.

Total investment income for the nine months ended September 30, 2019 and 2018 was $120.6 million and $134.0 million, respectively, and included interest income paid-in-kind from non-controlled/non-affiliated investments of $11.0 million and $13.9 million, respectively, as well as dividend income from TCW Strategic Ventures of $39.4 million and $32.0 million, respectively. The decrease in total investment income during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, was primarily due to the decrease in interest income from non-controlled/non-affiliated investments, which, as previously mentioned, is consistent with the wind down of our investment operations since the expiration of our investment period. This was partially offset by an increase in dividend income from TCW Strategic Ventures, stemming from loan payoffs during the first quarter of fiscal 2019.

During the three and nine months ended September 30, 2019, total investment income also included other fee income from non-controlled/non-affiliated investments of $0.1 million and $0.6 million, respectively.

Net investment income

Net investment income for the three months ended September 30, 2019 and 2018 was $20.2 million and $25.5 million, respectively. The decrease in net investment income during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was primarily attributable to lower total investment income as previously described, partially offset by lower expenses, particularly as it relates to our interest and credit facility expenses.

Net investment income for the nine months ended September 30, 2019 and 2018 was $98.4 million and $104.2 million, respectively. Similar to the three months ended September 30, 2019 and 2018, the decrease in net investment income during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily attributable to lower total investment income, partially offset by lower expenses, particularly as it relates to our interest and credit facility expenses.

Operating expenses for the three and nine months ended September 30, 2019 and 2018 were as follows (dollar amounts in thousands):


	For the three months ended September 30,					For the nine months ended September 30,
	2019			2018		2019		2018
Expenses:
Interest and credit facility expenses	$	4,264		$	5,507	$	13,902	$	19,688
Management fees		2,152			2,520		6,512		7,915
Administrative fees		262			287		788		908
Professional fees		156			274		592		826
Directors’ fees		78			70		243		229
Other expenses		(7	)		30		88		179

Total expenses		6,905			8,688		22,125		29,745

Expenses recaptured by the Investment Adviser		—			8		—		—

Net expenses	$	6,905		$	8,696	$	22,125	$	29,745

Our total operating expenses were $6.9 million and $8.7 million for the three months ended September 30, 2019 and 2018, respectively, and included management fees attributed to the Adviser of $2.2 million and $2.5 million, respectively. The decrease in management fees during the current quarter compared to the three months ended September 30, 2018 reflects the effects of the expiration of our Commitment Period. Interest and credit facility expenses decreased during the quarter compared to the three months ended September 30, 2018 primarily due to lower interest expense, resulting from a lower average outstanding balance during the current quarter, versus the comparable quarter in the prior year.

Our total operating expenses were $22.1 million and $29.7 million for the nine months ended September 30, 2019 and 2018, respectively. Our operating expenses included management fees attributed to the Adviser of $6.5 million and $7.9 million for the nine months ended September 30, 2019 and 2018, respectively. As previously described, the decrease in management fees during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 is due to the expiration of our Commitment Period. Interest and credit facility expenses decreased during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to a decrease in the amortization of our deferred financing costs.

Net expenses include an expense recapture from the Adviser of $8 thousand for the three and nine months ended September 30, 2018, respectively. The expense recapture of $8 thousand during the nine months ended September 30, 2018, was netted against the expense reimbursement of $8 thousand from the second quarter of fiscal 2018.

Net realized gain (loss) on non-controlled/non-affiliated investments

Our net realized gain on non-controlled/non-affiliated investments for the three months ended September 30, 2019 and 2018 was $0.1 million and $0.3 million, respectively. The net realized gain during the quarter is attributable to our disposition of our term loan to Ascensus Specialties LLC (formerly known as Vertellus Performance Chemicals LLC).

Our net realized gain on non-controlled/non-affiliated investments during the three months ended September 30, 2018 was due to our term loans to OTG Management, LLC. which recognized $0.2 million in gains from the reduction in the term loan balance and Ruby Tuesday, Inc.

Our net realized loss on non-controlled/non-affiliated investments for the nine months ended September 30, 2019 and 2018 was $0.3 million for both periods. The net realized loss on non-controlled/non-affiliated investments during the nine months ended September 30, 2019 was primarily due to $0.6 million of realized losses on our warrants for Quantum Corporation, which the portfolio company repurchased during the first quarter of calendar year 2019. These losses were partially offset by net realized gains from our term loans to Ruby Tuesday, Inc. and Ascensus Specialties LLC, which collectively realized gains of $0.3 million during the period.

Our net realized loss on non-controlled/non-affiliated investments during the nine months ended September 30, 2018 was primarily due to our term loans to H-D Advanced Manufacturing Company, which recognized realized losses of $2.4 million relating to PIK interest income that was forgiven in exchange for, among other things, a cash amendment fee and a credit term extension. These were partially offset by an aggregate $1.9 million of realized gains from the disposition of our term loans to Mavenir, Inc. and Mavenir Private Holdings II Ltd and reductions in the term loans to OTG Management, LLC and Ruby Tuesday, Inc. resulting in gains of $0.2 million and $0.1 million, respectively.

Net realized gain distributions from controlled affiliated investments

We did not recognize any realized gain distributions from controlled affiliated investments during the three and nine months ended September 30, 2019.

Our net realized gain distributions from controlled affiliated investments for the three and nine months ended September 30, 2018 were $0.1 million and $0.9 million, respectively. The net realized gain during 2018 reflects a distribution from TCW Strategic Ventures during the three months ended June 30, 2018 from its net short- and long-term gains.

Net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments

Our net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments for the three months ended September 30, 2019 and 2018 was $12.1 million and ($11.6) million, respectively. Our net change in unrealized appreciation/depreciation during the three months ended September 30, 2019 was primarily due to our term loans to Noramco, LLC, our warrants for Quantum Corporation, and our term loan to Pace Industries, Inc., which recorded unrealized appreciation of $9.0 million, $9.7 million, and $1.3 million, respectively, during the period. These were partially offset by our term loans to Frontier Spinning Mills Inc.; H-D Advanced Manufacturing Company; Carrier & Technology Holdings, LLC; and Guardia LLC (fka Carrier & Technology Solutions, LLC; together with Carrier Technology Holdings, LLC, “Carrier,” and formerly known as Patriot National, Inc.), which collectively recorded $6.0 million in unrealized depreciation during the period, as well as our common stock of Verus Financial, LLC, which recorded unrealized depreciation of $1.7 million.

Our net change in unrealized appreciation/depreciation for the three months ended September 30, 2018 was primarily due to our term loans to Quantum Corporation; Guardia LLC (fka Carrier & Technology Solutions, LLC); Cedar Electronics Holdings, Corp.; Ruby Tuesday, Inc.; and Normaco, LLC, which recorded unrealized depreciation of $5.0 million, $2.8 million, $2.5 million, $2.0 million and $1.8 million, all respectively. These were partially offset by a change in unrealized appreciation for our term loans to H-D Advanced Manufacturing of $4.4 million.

Our net change in unrealized appreciation/depreciation on non-controlled/non-affiliated investments for the nine months ended September 30, 2019 and 2018 was ($18.4) million and ($34.8) million, respectively. Our net change in unrealized appreciation/depreciation for the nine months ended September 30, 2019 was primarily due to our term loans to Carrier; Frontier Spinning Mills, Inc.; Noramco, LLC; and H-D Advanced Manufacturing Company, which collectively recognized $31.5 million in unrealized depreciation during the period. These were These were partially offset by unrealized gains from our Quantum Corporation warrants, which recognized an aggregate $12.3 million in unrealized appreciation during the period.

Our net change in unrealized appreciation/depreciation for the nine months ended September 30, 2018 was primarily due to our term loans to Guardia LLC (fka Carrier & Technology Solutions, LLC); Quantum Corporation; and Cedar Electronics Holdings, Corp. which recorded unrealized depreciation of $16.8 million, $13.1 million, and $8.7 million, respectively. These were partially offset by a change in unrealized appreciation for our term loans to H-D Advance Manufacturing of $3.2 million.

Net change in unrealized appreciation/depreciation on controlled/affiliated investments

Our net change in unrealized appreciation/depreciation on controlled/affiliated investments was $11.6 million and $18.6 million for the three months ended September 30, 2019 and 2018, respectively, and ($12.8) million and $3.3 million for the nine months ended September 30, 2019 and 2018, respectively. The net change in unrealized appreciation/depreciation on controlled/affiliated investments during the three and nine months ended September 30, 2019 was primarily attributable to a loan originated in 2016, as well as undistributed profits from TCW Strategic Ventures. The net change in unrealized appreciation/depreciation during the three and nine months ended September 30, 2018 was primarily attributable to certain loans and warrants originated in early 2018, as well as undistributed profits from TCW Strategic Ventures.

Net increase in members’ capital from operations

Our net increase in members’ capital from operations during the three months ended September 30, 2019 and 2018 was $44.0 million and $32.8 million, respectively. The higher increase during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was primarily attributable to net unrealized appreciation on non-controlled/non-affiliated investments. These were partially offset by lower net investment income and lower net change in unrealized appreciation on controlled affiliated investments.

Our net increase in members’ capital from operations during the nine months ended September 30, 2019 and 2018 was $66.9 million and $73.3 million, respectively. The lower increase during the nine months ended September 30, 2019 compared to the nine months ended September 30 2018 was primarily due to higher net unrealized depreciation our controlled affiliated investments as well as lower net investment income, partially offset by lower net unrealized depreciation on our non-controlled/non-affiliated investments.

Direct Lending Strategic Ventures LLC

On June 5, 2015, the Company, together with an affiliate of Security Benefit Corporation and accounts managed by Oak Hill Advisors, L.P., entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) to become members of TCW Strategic Ventures. TCW Strategic Ventures focuses primarily on making senior secured floating rate loans to middle-market borrowers. The Agreement was effective June 5, 2015. The Company’s capital commitment is $481.6 million, representing approximately 80% of the preferred and common equity ownership of TCW Strategic Ventures, with the third-party investors representing the remaining capital commitments and preferred and common equity ownership. A portion of the Company’s capital commitment was satisfied by the contribution of two loans to TCW Strategic Ventures. TCW Strategic Ventures also entered into a revolving credit facility to finance a portion of certain eligible investments on June 5, 2015. The revolving credit facility is for up to $600 million. TCW Strategic Ventures is managed by a management committee comprised of two members, one appointed by the Company and one appointed by Oak Hill Advisors, L.P. All decisions of the management committee require unanimous approval of its members. Neither the Company, nor the Adviser will receive management fees from this entity. Although the Company owns more than 25% of the voting securities of TCW Strategic Ventures, the Company does not believe that it has control over TCW Strategic Ventures (other than for purposes of the 1940 Act). The Company’s ability to withdraw from the fund is subject to restrictions.

The Company’s investments in controlled affiliated investments as of and transactions during the three months ended September 30, 2019 were as follows (dollar amounts in thousands):


	Fair Value as of January 1, 2019		Purchases		Sales		Change in Unrealized Gains and (Losses)			Fair Value as of September 30, 2019		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	260,252	$	—	$	—	$	(12,753	)	$	247,499	$	39,360	$	—

Total Controlled Affiliates	$	260,252	$	—	$	—	$	(12,753	)	$	247,499	$	39,360	$	—

The Company’s investments in controlled affiliated investments for the years ended December 31, 2018 were as follows (dollar amounts in thousands):


	Fair Value as of January 1, 2018		Purchases		Sales			Change in Unrealized Gains and (Losses)		Fair Value as of December 31, 2018		Dividend Income		Realized Gain Distribution
Controlled Affiliates
TCW Direct Lending Strategic Ventures LLC	$	259,698	$	21,600	$	(25,954	)	$	4,908	$	260,252	$	31,968	$	931

Total Controlled Affiliates	$	259,698	$	21,600	$	(25,954	)	$	4,908	$	260,252	$	31,968	$	931

For the nine months ended September 30, 2019 and year ended December 31, 2018, we did not recognize any realized gains (losses) from controlled affiliated investments. During the nine months ended September 30, 2019 and the year ended December 31, 2018, we recognized nil and $0.9 million, respectively, of net realized gain distributions from TCW Strategic Ventures.

Financial Condition, Liquidity and Capital Resources

On March 19, 2015 we completed the final private placement of Common Units. We generate cash from (1) drawing down capital in respect of Common Units, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.

Our primary use of cash is for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including expenses, management fees, incentive fees, and any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to the Common Unitholders.

As of September 30, 2019, aggregate Commitments, Undrawn Commitments, the percentage of Commitments funded and the number of subscribed for Units of the Company were as follows (dollar amounts in thousands):


	September 30, 2019			December 31, 2018
Commitments	$	2,013,470		$	2,013,470
Undrawn commitments	$	409,125		$	409,125
Percentage of commitments funded		79.7	%		79.7	%
Units		20,134,698			20,134,698

Natixis Credit Agreement

We have a secured revolving credit agreement (the “Credit Agreement”) with Natixis, New York Branch (“Natixis”) as administrative agent and committed lender. The Credit Agreement provides for a revolving credit line of up to $750 million (the “Maximum Commitment”) (the “Credit Facility”), subject to the lesser of the “Borrowing Base” assets or the Maximum Commitment (the “Available Commitment”). The Borrowing Base assets generally equal the sum of (a) a percentage of certain eligible investments in a controlled account, (b) a percentage of unfunded commitments from certain eligible investors in the Company and (c) cash in a controlled account. The Credit Agreement is generally secured by the Borrowing Base assets.

Moreover, the Credit Agreement’s stated maturity date was extended from November 10, 2017 to April 10, 2020. The Credit Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Company fail to satisfy certain covenants. As of September 30, 2019, we were in compliance with such covenants.

As of September 30, 2019 and December 31, 2018, the Available Commitment under the Third Amended and Restated Revolving Credit Agreement was $397 million and $500 million, respectively.

As of September 30, 2019 and December 31, 2018, the amounts outstanding under the Credit Facility were $364 million and $365 million, respectively. The carrying amount of the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of September 30, 2019 and December 31, 2018, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and conditions of the Credit Facility. The Company incurred financing costs of $10.1 million in connection with the April 10, 2017 Third Amended and Restated Revolving Credit Agreement. We recorded these costs as deferred financing costs on our Consolidated Statements of Asset and Liabilities and are being amortized over the life of the Credit Facility. As of September 30, 2019 and December 31, 2018, $1.4 million and $3.3 million, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the three and six months ended September 30, 2019 and 2018 was as follows (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Credit facility interest expense	$	3,483		$	4,761		$	11,578		$	11,508
Undrawn commitment fees		122			87			368			3,323
Administrative fees		17			16			49			49
Amortization of deferred financing costs		642			643			1,907			4,808

Total	$	4,264		$	5,507		$	13,902		$	19,688

Weighted average interest rate		4.56	%		4.49	%		4.76	%		4.31	%
Average outstanding balance		299,098			414,848			320,850			352,223

A summary of our contractual payment obligations as of September 30, 2019 and December 31, 2018 was as follows (dollar amounts in thousands):


Revolving Credit Agreement	Total Facility Commitment		Borrowings Outstanding		Available Amount⁽¹⁾
Total Debt Obligations – September 30, 2019	$	750,000	$	364,000	$	33,000
Total Debt Obligations – December 31, 2018	$	750,000	$	365,000	$	135,000

(1)	The amount available considers any limitations related to the debt facility borrowing.

The Company had the following unfunded commitments and unrealized losses by investment as of September 30, 2019 and December 31, 2018 (dollar amounts in thousands):


	Maturity/ Expiration	September 30, 2019				December 31, 2018
Unfunded Commitments	Maturity/ Expiration	Amount		Unrealized Losses		Amount		Unrealized Losses
Ascensus Specialties, LLC (fka Vertellus Performance Chemicals LLC)	September 2022	$	—	$	—	$	4,218	$	8
Guardia LLC (fka Carrier & Technology Solutions, LLC)	July 2023		2,559		—		2,656		—
ENA Holding Corporation	May 2021		—		—		1,601		45
FQSR, LLC	May 2023		6,243		—		4,566		73
Help At Home, LLC	August 2020		14,865		—		14,865		—
Quicken Parent Corp.	April 2021		863		32		862		43
Ruby Tuesday, Inc.	December 2022		4,575		—		4,575		—

Total		$	29,105	$	32	$	33,343	$	169

The Company’s total capital commitment to its underlying investment in Strategic Ventures is $481,600. As of September 30, 2019 and December 31, 2018, the Company’s unfunded commitment to Strategic Ventures was $219,646.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, including changes in interest rates. As of September 30, 2019, 99.7% of our debt investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. As of September 30, 2019, the percentage of our floating rate debt investments that bore interest based on an interest rate floor was 0.0%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our September 30, 2019 consolidated balance sheet, the following table shows the annual impact on net investment income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure (dollar amounts in thousands):


Basis Point Change	Interest Income			Interest Expense			Net Investment Income (Loss)
Up 300 basis points	$	32,786		$	11,072		$	21,714
Up 200 basis points		21,458			7,381			14,077
Up 100 basis points		10,131			3,691			6,440
Down 100 basis points		(12,861	)		(3,861	)		(9,000	)
Down 200 basis points		(4,573	)		(7,501	)		2,928
Down 300 basis points		(5,347	)		(7,574	)		2,227

Item 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities

On September 19, 2014, the Company began accepting subscription agreements from investors for the private sale of its Common Units. The Company continued to enter into subscription agreements through the final closing date of March 19, 2015. Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Unitholders. The issuance of the Common Units pursuant to these subscription agreements and any draw by the Company under the related Commitments is expected to be exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and Rule 506(c) of Regulation D thereunder.

Issuer purchases of equity securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits.

(a) Exhibits


Exhibits

3.1		Certificate of Formation (incorporated by reference to Exhibit 3.1 to a registration on Form 10 filed on April 18, 2014)

3.4		Second Amended and Restated Limited Liability Company Agreement, dated September 19, 2014 (incorporated by reference to Exhibit 3.4 to a filing on Form 10-Q filed on November 7, 2014)

10.1		Investment Advisory and Management Agreement (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on September 25, 2014).

10.2		Administration Agreement dated September 15, 2014, by and between TCW Direct Lending LLC and TCW Asset Management Company (incorporated by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed on November 7, 2014).

10.6		Final form of the TCW Direct Lending Strategic Ventures LLC Amended and Restated Limited Liability Company Agreement, dated June 5, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 10, 2015).

10.8		Third Amended and Restated Revolving Credit Agreement, dated April 10, 2017, by and among TCW Direct Lending LLC, as borrower, Natixis, New York Branch, as administrative agent, sole lead arranger and sole book manager, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 14, 2017).

31.1*		Certification of President Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1*		Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

32.2*		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

99.1*		Financial Statements of TCW Direct Lending Strategic Ventures LLC for the three and nine months ended September 30, 2019 and 2018

*	Filed herewith

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TCW DIRECT LENDING LLC

Date: November 4, 2019	By:	/s/ Richard T. Miller
		Richard T. Miller
		President

Date: November 4, 2019	By:	/s/ James G. Krause
		James G. Krause
		Chief Financial Officer