Good day, ladies and gentlemen, and welcome to the Fidus Investment Corporation Q3 2013 Earnings Conference Call. (Operator instructions.) As a reminder, today’s conference is being recorded. I would now like to turn over today’s conference call to Ms. Stephanie Prince. Ma’am, you may begin.

Thank you, Kevin, and good morning everyone. This is Stephanie Prince from LHA. Thank you for joining us for Fidus Investment Corporation’s Q3 2013 Earnings Conference Call. With me this morning are Ed Ross, Fidus Investment Corporation’s Chairman and Chief Executive Officer, and Cary Schaefer, Chief Financial Officer and Chief Compliance Officer. Fidus Investment Corporation issued a press release yesterday afternoon with details of the company’s quarterly financial and operating results. A copy of the press release is available on the Investor Relations page of the company’s website at www.fdus.com. I’d like to remind everyone that today’s call is being recorded. A replay of today’s call will be available by using the telephone numbers and conference ID provided in the earnings press release. In addition, an archived webcast replay will be available on the Investor Relations page of the company’s website at www.fdus.com following the conclusion of this conference call. I’d also like to call your attention to the customary Safe Harbor disclosure regarding forward-looking information included in the earnings release. The conference call today will contain certain forward-looking statements including statements regarding the goals, strategies, beliefs, future potential, operating results and cash flow of Fidus Investment Corporation. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, November 8, 2013, these statements are not guarantees of future performance. Time sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors including but not limited to the factors set forth in the company’s filings with the SEC. Fidus undertakes no obligation to update or revise any of these forward-looking statements. I’d now like to turn the call over to Ed Ross. Ed?

Thank you, Stephanie, and good morning everyone. Welcome to our Q3 2013 Earnings Call. Today I’d like to begin by discussing our Q3 financial results and the special dividend that we announced yesterday. After that I’ll discuss the Q3 investment activity, the performance of our investment portfolio, and current market conditions. I’ll then turn the call over to Cary who will go into more detail about our financial results and l liquidity position before we open up the call for questions. Turning to our Q3 results our investment portfolio delivered a high level of performance during Q3. We generated net investment income or NII of $5.3 million or $0.38 per share. Our adjusted NII, which we define as net investment income excluding any capital gains incentive fee attributable to realized and unrealized gains and losses was $0.37 per share. Last quarter we began to report adjusted NII as we believe it better reflects our core earnings. And importantly, as we mentioned on our last call we recognized long-term capital gains of $24.6 million during Q3. These gains were primarily the result of a successful exit of our investments in Worldwide Express Operations, LLC, in connection with the sale of the company including payment in full on our subordinated notes and a realized gain of approximately $22.1 million on our equity investments. In addition, we recognized a net gain of approximately $2.5 million on the sale of our warrants to Goodrich Quality Theaters in connection with the company’s partial repayment of our subordinated loan investment. At September 30 our net asset value, or NAV, was $15.98 per share compared to $15.27 at September 30, 2012. In light of our Q3 realized capital gains we are very pleased to announce a special cash dividend of $0.38 per share in addition to our…

Thank you, Ed, and good morning everyone. I’ll now review our Q3 results in more detail and close with comments on our liquidity position. Total investment income was $10.3 million for Q3 2013, an increase of $1.3 million or approximately 14% over the $9.0 million recorded during Q3 2012. This increase was primarily driven by the increase in average outstanding debt investments in Q3 2013 compared to Q3 last year. Dividend income increased $0.3 million in Q3 compared to the prior year primarily due to a higher amount of income-producing preferred equity investments. Fee income, which may fluctuate from quarter to quarter depending on the level of new investments and/or prepayment activity, was $516,000 for Q3 2013, consistent with the $514,000 in last year’s Q3. Total expenses for Q3 2013 were $5.0 million, essentially flat with Q3 2012. Interest expense on our SBA debentures was approximately $1.8 million for Q3 2013 compared to $1.7 million for Q3 2012, an increase due to a slightly higher average level of outstanding debentures. As of September 30, 2013, the weighted average fixed interest rate on our SBA debentures was 4.6% before fees. Administrative service expenses, professional fees, and other general and administrative expenses totaled approximately $737,000 for the quarter, 28% higher than Q3 2012 which totaled approximately $576,000. The increase was primarily due to an increase in professional and administrative fees associated with our growing portfolio as well as additions to the Finance and Accounting Department staff in July, 2013. The base management fee increased $0.2 million due to higher average outstanding assets net of cash, and total incentive fees decreased $0.5 million due to a reversal of previously accrued capital gains incentive fees which was partially offset by higher income incentive fees. The capital gains incentive fee decreased $0.6 million due to…

Thanks, Cary. Before opening up the call for questions I’d like to thank the outstanding team at Fidus for their great work and our shareholders for their continued support. I’ll now turn the call back over to Kevin for Q&A. Kevin?

(Operator instructions.) Our first question comes from Robert Dodd with Raymond James. Robert Dodd – Raymond James: Congratulations on the quarter. A couple questions: first on the dividend and spillover capacity, what is your current spillover income at I guess at the end of Q3 or pro forma for the special at the end of the year? Do you have that number handy?

I’ll let Cary take that one.

Sure, good morning, Robert. The spillover income as of the end of Q3, as of September 30, was $21.5 million so after factoring in the special dividends planned and before any potential activity through the end of the year, that would bring it down by about another $5.2 million. Robert Dodd – Raymond James: So that would put you at about nine months’ worth of regular dividend in hand in spillover, and of course you’re earning regular dividend. Obviously the dividend policy is up to the Board but can you clarify for us… I mean as far as I understand the, and of course this is obscure now – the IRS starts to look and goes a little funny if you’ve got more than nine months in regular dividend spillover on hand given that you only have technically until four (inaudible ) give or take to distribute the spillover in the following year. So is that spillover getting a little too high and is that going to affect dividend policy going forward? I mean it’s a good problem to have obviously, but…

[laughing] Right. Well, your question’s a very good one, Robert, and it’s obviously the whole dividend question and dividend policy question is one we spend a lot of time thinking about and thinking through, and talking to the Board about. And let me try to go through the whole situation to give you a sense of our approach. To start with, our top priority is to perform well for our shareholders over the long term. Our ultimate goal is to deliver stable and growing dividends to our shareholders while also growing our portfolio value and our NAV over the long term. We also however acknowledge that uncertainty continues to be a common theme in today’s world and we continue to make these types of decisions as a Board with a conservative bias; and intend to maintain a high margin of safety as we move forward. You know, as it pertains to excess current earnings and our net realized long-term capital gains we will continue to evaluate some complement of the following distribution options. Number one would be to periodically make special cash dividend declarations but on a periodic basis as we see fit. Number two would be to utilize our ability as a BDC RIC to have spillover income which is defined as current year… [technical difficulties] …whereby Fidus Investment Corporation would retain a portion of our long-term capital gains. In light of the first point I just made, in terms of special dividends, I think we’re extremely pleased to announce and distribute a special cash dividend of approximately $5.2 million or $0.38 per share. [technical difficulties] …total retention for growth. …special dividends to stockholders we are equally as pleased that our platform continues to generate significant new investment opportunities that should create longer-term shareholder value. So hopefully that kind of spells out the thought process that we have, and as we move forward we’ll continue… [technical difficulties] Robert Dodd – Raymond James: I’m sorry, you were breaking up a little bit there, I don’t know if it’s on my end or yours. I got most of that and I appreciate the color there. If I can one more question – your commentary on obviously the subsequent events where you’ve deployed a considerable amount of capital relatively early in the quarter. Your comments to the effect of you expect market activity to continue at elevated rates. I presume you don’t want us to take the $40 million that you’ve done so far and run rate that in terms of originations, not net, and run rate that for Q4. But can you give us a little more color on maybe what the pipeline is shaking out as in terms of originations, and if you’ve gotten any indications so far that you’re going to have more prepayments in Q4?

Sure. You broke up a little bit there, I’m not sure why. But I think I know what the question was and I’ll try to address it. In terms of market activity, I think market activity continues to be pretty good – I wouldn’t say vibrant but it’s healthy. And for us it’s been a healthy year of originations. Just to go back to Q3 for a second, it was an interesting quarter. We were very busy but we actually had, depending upon how you look at it at least three and some would say four deals that actually fell apart once we were anointed and started working on kind of going towards closing. So it was kind of an unfortunate quarter from that perspective. Having said that we did get a good start to Q4. We continued to be very busy both on the new investment front as well as managing the portfolio but I don’t want to extrapolate given what happened last quarter at all to say “Expect more originations.” I just don’t think that is… It’s just deals take on a life of their own and they’re just very hard to predict. But we are very busy and we’re seeing good deal flow. With regard to debt repayments, one of the subsequent events was a small debt repayment that we actually just received yesterday. And I think what we would expect for the quarter as we sit here today, and again, we’ve been surprised here recently on a couple, is probably another deal with a repayment on the debt side of things – but not anywhere near what happened in Q3 or even in Q2. But I do think repayments is a continuing theme, and 2014 will also have I think a reasonable level of repayments though I think, as I look at it today it’ll be less than this year. So it’s just kind of one of the things we’re dealing with. Companies are lowering their cost of capital tot eh extent they can and there’s also M&A activity at a high level, especially for very good companies. Robert Dodd – Raymond James: Thank you very much, very helpful.

Yep, sure. Nice talking to you, Robert.

The next question comes from Bryce Rowe with Robert W. Baird. Bryce Rowe – Robert W Baird: Thanks, good morning. Just a couple questions, and I agree with Robert there, Ed, that there was some breakup when you were talking about the special dividend. So those of us on the phone might have missed a little bit of your comment around the special divided, so maybe you can repeat those. But I wanted to ask a little bit about the activity subsequent to Q3. As Robert pointed out it’s been pretty strong activities since Q3. You made a mention of use of cash to help fund that activity. I wanted to get a feel for whether or not you would take advantage of the commitments that are available to you through the SBA or whether or not we should expect continued cash usage.

Okay, good question, Bryce, and it’s one we look at quite often. I think right now given the level of cash balances it’s more accretive if you will or profitable for shareholders, for us to invest the cash. I think that we’ll get down to a level where it makes sense to keep some cash in reserve and start using the SBA commitments. So I would expect incremental investments in portfolio growth to initially be funded with cash, and then when we get down closer to reserve levels or even $10 million above reserve levels we will start using the SBA debentures primarily. Bryce Rowe – Robert W Baird: Okay, that’s helpful. And then I guess one other question, and we’ve talked about this on the Q2 conference call – and I certainly don’t mean to harp on anything negative because you guys have certainly produced a lot of positives since your IPO. But we continue to see a little bit of degradation in one of the investments, I guess Avrio from a fair value to cost perspective. And obviously that investment is also 100% pick in terms of the accrual, or the interest accrual. I just wanted to get a feel for one, if that company is progressing towards a nonaccrual status, and then two, how do you determine nonaccrual status for a company like that when you aren’t in fact receiving any cash interest.

Okay, good question – very good question, and you know, I’ll take this one holistically and then come down more to Avrio. Number one, just to talk about the portfolio for a second I think we continue to feel very good about the overall health of the portfolio. I would characterize it as being in a slow growth and stable mode, so we’re pleased with the overall performance. And I’ve mentioned this before and it’s what I would expect is that we have a lot of companies performing to expectations, but as we’d expect we have a few companies that are exceeding expectations and we have a few companies that are underperforming. And that is what we would expect as we go forward. And it’s one of the reasons continuing to diversify our portfolio is a big goal of ours. I think with regard to the portfolio, just to hit it there, it is an uncertain environment. There are a couple trends in the industry. I think overall the economy continues to be in a slow growth mode. There’s a few sectors that are getting I think hit a little tougher than others. One would be on kind of the consumer side of things – discretionary spending I think is under pressure a little bit with the higher tax rates and whatnot. So I think that’s one sector that we’re focused on, and then other end markets that are effected by sequestration is something that we continue to be focused on and I think is also impacting some portfolio companies. With regard to Avrio, obviously this company has not performed to our expectations. There’s clearly a higher level of risk and that’s reflected in the valuation, and in this case sequestration has not helped this company’s performance. But having said that there is a new CEO that joined the company in February; we are very pleased with the progress that he has made but it’s in the face of a pretty tough environment. We continue to believe in the value proposition of this business and the opportunities that the markets provide over the long term. Having said that the valuation reflects a high level of risk with regard to this. We also have a lot of support from just the overall equity group for this company so that is also a factor in how we’re kind of looking at the business holistically. I don’t know if you want to add anything to that, Cary?

Yeah, the only thing I would add there, Bryce, is regarding your question around the nonaccrual approach with respect to the pick. And I think what you’re seeing in the valuation is a lot of our methodologies for fair value driving really based on yield and kind of yield comparison to market. And at 100% pick this security is definitely not a market piece of paper, nor given the situation would we expect it to be and that’s reflected in the fair value. I do however think that when we look at nonaccrual and pick, as mentioned there has been and there continues to be a fair bit of equity support below our debt securities. And so when we’re evaluating nonaccruals even in a 100% pick situation the determination is our belief system around recovery of that pick – will that pick be paid to us? And that’s what you’re seeing reflected currently in our nonaccrual status for, by not having that on nonaccrual status. It’s our belief system that that will be collected, including the pick amount. Bryce Rowe – Robert W Baird: Okay, great. That’s helpful. Thank you.

Let me come back to your first request, Bryce, real quickly and just touch on dividend policy again. I’m sorry I was breaking up; I’m not sure what happened there. I think just to hit the top, our focus is on performing over the long term for shareholders. Our goal is to deliver stable and growing dividends to our shareholders while also growing our portfolio value and our net asset value over the long term. At the same time we acknowledge that uncertainty continues to be a very common theme in today’s world so we’re going to continue to make things like dividend distribution decisions with a conservative bias, and we intend to maintain a high margin of safety as we move forward. With regard to excess current earnings and net realized long-term capital gains we will continue to evaluate some complement of the following distribution options: one is to periodically make special cash dividend declarations; number two would be to utilize our ability as a BDC RIC to have spillover income which is defined as current year taxable earnings that can be spilled over and distributed in the future. And number three would be to make a deemed distribution whereby Fidus Investment Corporation would retain some portion of our long-term capital gains. So in light of those three options we’re pleased to announce and distribute a special cash distribution. And you know, as we move forward I think there’s going to be a balance between return of capital, i.e. distributions, and capital retention for growth and investment. But we’re pleased to be in a position to provide that special dividend. At the same time we’re very pleased with the investment opportunities that our team continues to generate. So hopefully that’s helpful from a thought process perspective. Bryce Rowe – Robert W Baird: Thank you for restating that.

Absolutely, absolutely.

(Operator instructions.) I’m not showing any further questions at this time. I’d like to turn the conference back over to Ed Ross for closing comments.

Thank you, Kevin, and thank you everyone for joining us this morning. We look forward to speaking to you on our year-end call in early March. I hope everyone has a great day and a great weekend. Thanks again.

Ladies and gentlemen, that does conclude today’s presentation. You may now disconnect and have a wonderful day.