Good morning, ladies and gentlemen, and welcome to the Kohlberg Capital Corporation 2007 earnings conference call. An earnings press release was distributed early this morning. If you did not receive a copy, the release is available on the company's website at www.KohlbergCapital.com in the Investor Relations section. (Operator Instructions) As a reminder, this call is being recorded today, March 10, 2008. This call is also being hosted on a live webcast which can be accessed at our company's website at www.KohlbergCapital.com in the Investor Relations section under Events. In addition, if you would like to be added to the company's distribution list for news events, including earnings releases, please contact Denise Rodriguez at 212455-8316. At this time, management would like me to inform you that certain statements made during this conference call which are not historical may be deemed forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. Although Kohlberg Capital Corporation believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks such as those described in the Risk Factor Section of our 10K filed on March 29, 2007 and sections of our Forms 10Q and other SEC documents filed during the course of the year could cause actual results to differ materially from expectations. Now at this time for opening remarks I would like to introduce Chris Lacovara, Chairman. Please, Chris, please go ahead.

Thank you very much, and thank you all for joining us this morning. As always, we welcome the opportunity to speak to our investors and to discuss our financial results, business activities and our progress for 2007, which, as I think you all know, represented our first full year of operations at Kohlberg Capital. I will begin the call with some general commentary on our balance sheet, investing and lending activities, as well as on the activities of our wholly owned asset management business, Katonah Debt Advisors or KDA, then I'll turn the call over to our CEO, Dayl Pearson, who will discuss our middle market investment activities in more detail before turning the call over to Mike Wirth, our CFO, who will then provide a brief recap of our full-year and fourth quarter results and some additional discussion regarding our financial performance. At the conclusion of our remarks we will open the call for any questions. In general, Kohlberg Capital recorded a modest 2.5% decline in average net asset value for the quarter, net asset value per share, really as a result of the continued general decline in the value of credit assets in the fourth quarter, again, in line with general market conditions. But our quarterly earnings and dividend for Q4 reflected the continued strong performance of our investment portfolio, and we continue to see market conditions as on balance a positive for the execution of our business strategy. To start off, just a couple of general reminders about our company and our strategy. First, we are long-term investors and plan to realize the value paid for our investments, so marked-to-market losses of the kind I just mentioned, while important, do not impact our dividend. That's as distinct from actual, realized losses, which would impact distributable cash, but…

Thank you, Chris. Let's talk about our middle market investment portfolio. At the end of 2007 we had debt securities which approximated $411 million. I think, as some of you know, we have tried to manage this in very conservative manner. And I think three things. One that Chris alluded to is we've tried to stay away from highly cyclical businesses as much as possible. Secondly we've tried to maintain our highly secured portfolio; the further up you are in the capital structure, the higher recoveries you have in troubled situations. And third is our diversity, and I'm going to talk about the second two. I think we've already alluded to the first. Again, as Chris said, first lien loans are represent about 63% of our portfolio, with second lien loans accounting for another 28%. So 91% of our loan assets are secured loans, with 63% - almost two-thirds - being in the most senior part of the capital structure. We actually increased our percentage of first lien loans in the fourth quarter, and this was because of the fact that the relative spreads on those expanded much more dramatically than the second lien or mezzanine loans did. Credit quality of our portfolio at year end was outstanding. All of our investments were current on their debt service as of 12/31. Again, we continue to be very rigorous and disciplined in terms of looking at new investments. In terms of diversity - and we again have investments across 26 different industries and 91 different entities - so our average balance per entity is approximately $5 million. Our Top 10 exposures within our debt securities portfolio represent approximately 18% of total investments. I think if you compare that to most of our BDC brethren that's much more diversified than most. With…

Thank you, Dayl. Good morning, everyone. I will first discuss our full year 2007 results as well as similar benchmarks for the fourth quarter. As this is our first full year of operations and the financial results for December 31, 2006 covered only approximately two weeks after our IPO, I will not make any comments regarding the comparability of prior results to current year performance since such a comparison would not be meaningful. For the full year of 2007, we reported net investment income, excluding unrealized gains, of $25.3 million or $1.41 per share. For the three months ended December 31, 2007, we reported net investment income excluding unrealized losses of $7.2 million or $0.40 per share. Our net investment income, excluding unrealized losses, for the year and for the fourth quarter exceeded the average consensus estimates both at the time of our IPO in December 2006 and as most recently reported. Net investment income excluding unrealized losses was also one of the benchmarks used to determine our quarterly dividend. For the fourth quarter of 2007, we paid a $0.39 per share dividend, and our total dividends paid for the year were $1.40 per share. In both instances our net investment income excluding unrealized gains or losses covered our dividend payments with no return of GAAP capital. We believe an important distinction in the quality of our earnings and the resultive dividend is that they are more dependent on net interest and dividend income rather than on capital gains on sales of investments. We believe that the income stream on interest and dividends is much more predictable, recurring and less volatile than relying on capital gains to earn the dividend, particularly in the current market environment. I will now highlight the components of our net investment income. Total gross investment…

Thank you. (Operator Instructions) In our first question, we'll hear from David Shavarini with BMO Capital Markets.

Hi, guys. Good quarter and year given the difficult environment. My first question is on - regarding the evaluation, how much of the portfolio has market quotes available as opposed to internally determining the valuations?

We have approximately 38% - 39% - 38% roughly that we call Level 1 where there are marked-to-market marks. So this is of the total portfolio, which would include Katonah Debt Advisors and the CLO funds, and of that, Level 3 assets - which are primarily Katonah Debt Advisors - would be another 24%. But again, for Katonah Debt Advisors and for the CLO funds, there are pretty objective inputs that go into the valuation of those particular investments.

Okay. Okay. Next question, you mentioned in the quarter about how there's plenty of opportunity to buy discounted assets. Did you take advantage of that and get any assets at a discount?

We did, yes, some. We did buy some in the fourth quarter at a discount.

What was the average discount?

Well, none of them were deeply discounted. It was in the mid to high 90s at that point. And again, we did not do a lot of it just because we didn't have an enormous amount of liquidity.

Okay. And where are those loans, like the loan market today? Has it deteriorated much from the fourth quarter?

I would say it has been very volatile. It was down substantial in January and February. It seems to have sort of stabilized and over the last couple of weeks moved up a bit, but it's very volatile given the lack of liquidity in the market right now.

Okay. Regarding the couple covenant defaults in the fourth quarter, could you give a little more color on that and how you were able to cure them so quickly, and what sort of industries those were involved with?

Well, they were in a variety of industries and, you know, in terms of - middle market loans have a tendency to have a very full and tight covenant package, and it's really not that unusual to have covenant defaults because you really don't want anything to get offsides completely. In two of the cases, you know, the defaults were due to - I wouldn't say substantial, but not insignificant underperformance of the companies, and in both of those cases the equity sponsor stepped up and put in additional capital, and therefore was able to cure those defaults by reducing leverage back to the levels that we were comfortable with.

Okay. And then lastly, what was the run rate of KDA's net income in the fourth quarter?

Hang on just a moment. KDA's run rate for the fourth quarter - and this would be after tax was $1.6 million.

That's for quarterly.

That's for the quarter. That's correct.

Yeah, between $6 and $7 million, Dave. That's why we think we head into 2008 with a - you know, that's up from probably less than half that at the start of 2007, so we head into 2008 with good growth in distributable income at KDA.

Okay. Great. Thanks, guys.

And we'll move on to John Hecht with JMP Securities.

Good morning, guys. Thanks for taking my questions. Just a couple. One is, Dayl, you referred to, I think, about 7% of the portfolio being fixed rate so, in consideration of that, what's happened with LIBOR as well as, you know, widening spreads and incremental assets, where do you guys envision margins going to and, I guess, a more specific word, on the yield side things settling out in the next couple of quarters?

Well, I think one thing that, while LIBOR has dropped in any amendments that we have and in any new facilities, there's been the reemergence of the LIBOR floor. And generally, there's a LIBOR floor that says no matter what LIBOR is, we never charge less than 3% or 4%. In a couple cases, we have a 4% LIBOR floor, and in one case you have a 3.5% LIBOR floor. And on top of that new deals right now, middle market deals, first lien, are probably pricing around LIBOR 500 at some discount. So really, the overall yield hasn't gone down that much. And remember, you know, 50% of our capital structure at this point is floating rate as well. And, you know, that 7.9% fixed rate only refers to the loan portfolio. It does not refer to all of our CLO investments and our investment in Katonah Debt Advisors.

So as you work through this calendar year, establish some more floors, invest more, we should actually potentially see some widening margins?

I think so. It all depends upon how active we are in terms of adding new assets. The loans that are rolling off obviously - and we have a fair amount in the first and anticipate in the second quarter - are all loans without LIBOR floors, so they'll be replaced with loans with LIBOR floors or fixed-rate securities.

Okay. Thanks. And have you guys publicly discussed sort of fund raising goals for Scott's Cove and the PKSI in the coming quarters?

I don't think we've discussed them publicly, so I'm not sure we can really comment. We can comment? Mike's saying we can comment. Okay. The Panagos Katz, I think, is targeting a fund of sort of, you know, somewhere 150 to 250 to get started, and they're currently interviewing placement agents. And, as I said, you know, they will not only be investing that fund, in which, you know, Kohlberg Capital may potentially make an investment, but also would be generating, you know, direct investment opportunities for the balance sheet. At Scott's Cove they currently have about $60 million in assets under management, and we do expect to increase that. I think they will benefit from being part of the larger Kohlberg Capital and KDA platform, but in addition those folks will be very much a part of some other non-CLO fund structures that Katonah Debt Advisors is looking at, some lower-levered funds that, you know, have a little bit more flexibility in terms of what they can invest in and are really designed to capture, you know, discounted credit assets. So their capital raise may not be, you know, or capital increase may not be that distinct from other funds that KDA itself is raising as part of that.

Okay. I see. Thanks very much for the color, guys.

(Operator Instructions) And next we'll hear from [Dean Toski] with Lehman Brothers.

Good morning, gentlemen. Dayl, in your prepared remarks you mentioned that you anticipate some defaults in 2008 but no losses. Now is that more looking out at the market in general or are there specific securities that you're concerned about and, if so, can you provide like a watch list or some sort of risk metric to give us a sense of what the size of potential issues could be in the portfolio?

Well, we don't really - you know, we have an internal watch list, but that's not something we publicly disclose. I would say we're just monitoring our portfolio very carefully. We recently had a full investment committee presentation, and I think our view is that our portfolio's in extremely good shape relative to where the economy is right now. But obviously any portfolio of the size we have is going to have some issues or potential issues, so I think we're just - I think, you know, I think everyone's going to have some defaults. They're clearly going to be up this year across the market. I think they were less than 1% last year, and I think [Louise] and the others are predicting it's going to be 4% to 5% this year. We think we will do better than that, but again, most of our loans are fairly high in the capital structure so, you know, we think that these are, you know, fairly limited issues from our perspective.

Okay. And then if there is a default or a covenant violation, does that impact your ability to finance it on your credit facility?

If there is a payment default, yes. If there's a covenant violation, no.

Okay. And then you mentioned that you were expecting some repayments or prepayments. Can you throw out a sense of the size of those over the next couple of quarters or that you have visibility on?

Well, what we have visibility on is probably only through the next, you know, 45 days, and that's probably, you know, around between $9 and $10 million that we know about. We had up in January and February - I think we had about $6 or $7 million. And in some cases, you know, they were loans we were carrying at 89 that paid off at par. And two that we know that we're going to get prepaid on over the course of the next 45 days, we are carrying at par but they're going to pay off at 101 due to the call protection we have.

And Mr. Toski, did you have any further comments?

No, thank you very much, gentlemen.

(Operator Instructions) And there are no further questions at this time.

Okay. Thank you all for your time.

And that will conclude today's call. We thank you for your participation.