Dayl Pearson - CEO Ted Gilpin - CFO

Good morning, ladies and gentlemen, and welcome to the KCAP Financial Incorporated Conference Call. An earnings press release was distributed yesterday. If you did not receive a copy, the release is available on the company's website at www.kcapfinancial.com in the Investor Relations section. As a reminder, this conference call is being recorded today, Thursday, May 5, 2016. This call is also being hosted on a live webcast which can be accessed at our company's website at www.kcapfinancial.com, in the Investor Relations section under Events. Today's conference call includes forward-looking statements and projections and we ask that you refer to KCAP Financial most recent filings with the SEC for important factors that would cause actual results to differ materially from these projections. KCAP Financial does not undertake to update its forward-looking statements unless required by law. I would now like to introduce your host for today's conference, Mr. Dayl Pearson, President and Chief Executive Officer of KCAP Financial. Mr. Pearson, you may begin.

Thank you. Good morning and thank you for joining KCAP Financial for a review of our first quarter 2016 results. Today, I will review some of the important highlights and activities from the first quarter as well as provide more detail on our direct lending business and the performance of our Asset Manager Affiliates. I will then turn the call over to our Chief Financial Officer, Ted Gilpin, who will provide a brief recap of our first quarter operating results and our financial condition at the end of the quarter. We will then open the line for your questions at the end of the call. A presentation outlining a few of our key accomplishments during the quarter can be found on the IR section of our website. To start let me provide a brief recap of some of the important highlights from the first quarter which are summarized on Slide 3 of our earnings presentation. For the first quarter of 2016, our NII was $0.13 per share and our taxable distributable income or TDI was $0.16 per share. Remember that a BDC must distribute 90% of TDI each year, also remember that some BDC's use different terminologies to describe taxable distributable income, but that is the actual designation. We also reported a non-GAAP metric resources available for distribution which is a good proxy for cash available to shareholders as well as what is a sustainable dividend, resources available for distribution was $0.17 per share for the quarter. Our first quarter shareholder distribution was $0.15 per share consistent with $0.15 paid in the fourth quarter of 2015. I would now like to discuss the performance of our loan and securities business and asset manager affiliates in more details. Turning to Slide 4, during the quarter we invested approximately $6 million in…

Thank you, Dayl. Good morning, everyone. For the quarter ended March 31, 2016, net investment income or NII was 4.8 million or $0.13 per basic share, down from 6.5 million or $0.18 per basic share for the first quarter of 2015 and down from 5.3 million and $0.14 per basic share from fourth quarter of 2015. Taxable distributable income or TDI for the first quarter of 2016 was 5.9 million or $0.16 per share, there was 7 million or $0.19 per share for the first quarter of 2015. Resources available for distribution, a non-GAAP measure which is NII plus taxable distributable excess cash on CLOs, plus cash distributed by the AMAs in excess of their taxable earnings was 6.4 million or $0.17 per basic share for the first quarter of 2016, versus 8.3 million or $0.23 per share for first quarter of 2015. The company declared as $0.15 distribution in the first quarter of 2016, as Dayl said, consistent with December 2015. As of March 31, 2016 our net and asset values to at $5.50 down from $5.82 at the end of the fourth quarter of 2015, down to $7.16 on March 31, 2015. As Dayl mentioned, volatile markets starting in the latter half of 2015 which continued into the beginning of 2016 resulted in realized and unrealized depreciation at 11.6 million, or approximately $0.31 per weighted average basic share. At this point, I'd like to discuss the details of our first quarter results for 2016, first interest income on our debt securities for the quarter ended March 31, 2016 was 5.7 million essentially flat compared to 5.7 million for the fourth quarter of 2015. Interest income our debt securities of 6.2 million in the first quarter of 2015, our debt securities portfolio continues to grow as a percent of…

I just want to thank everyone for being on the call and we will talk to you again at the end of the second quarter. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.