Good morning, and welcome to the Gladstone Capital Corporation's fourth quarter and year ended September 30, 2012 shareholders' conference call. All participants will be in a listen-only mode. (Operator Instructions) Please note that this event is being recorded. I would now like to turn the conference over to David Gladstone. Sir Gladstone, please go ahead.

All right, thank you, Keith for that nice introduction, and also the information that you gave everybody. Hello and good morning to all of you out there. This is David Gladstone, Chairman and this is the quarterly earnings conference call for shareholders and analysts of Gladstone Capital. Common stock is traded under the symbol, GLAD and the term preferred stock is traded under the symbol GLADP and both of those are traded on NASDAQ on the global market. Thanks to all of you for calling in. we are happy to talk to the shareholders about our company and wish there was more opportunities to talk to you. We hope all of you will take the opportunity to go to the website at www.gladstonecapital.com where you can sign up for e-mail notices so you can receive information about us on a timely fashion. Please remember that if you are in the Washington, D.C. area, you have an open invitation to visit us here in McLean, Virginia. Please stop by and say hello. You will see some of the finest people in the business. We are glad all of our offices are back and running from Hurricane Sandy. We are lucky here in McLean to have experienced minimal work interruptions and the team members running your business are all safe. So we are all glad about that. Now, before beginning, let me read a statement about forward-looking statements. This conference call may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements inherently involve certain risks and uncertainties and other factors, even though they are based on our current plans, and we believe those plans…

Good morning. During our ended September 30, 2012 our net production was down due to early payoffs of partially $24.3 million and also sales of two of our non-accrual companies totaling $5 million of cost. We extended $2.6 million to existing portfolio companies through revolver draws or additional investment during the quarter. We continued to focus on managing the portfolio company performance. In addition, after the quarter end, we received other scheduled and unscheduled principal payments totaling about $22.8 million and related to our early payoffs on one of our portfolio companies. During the fourth quarter, we received $1.2 million in success fees that we had mentioned in our third quarter earnings call. It’s a subsequent event. During the year ended September 30, 2012 we invested an aggregate of $29.6 million in debt and equity investments and several new proprietary portfolio companies and an aggregate of $15.5 million in new syndicated investments and we dispersed $23.8 million to existing portfolio companies in the form of revolver draws, additions to term that was in equity. Offsetting this $68.9 million in investment during the year ended September 30, 2012 was scheduled and unscheduled payments of $67.4 million including 10 early payoffs at par totaling $47.5 million which resulted in an aggregate of $4 million in success fees during the 2012 fiscal year-end. We used net repayments during the quarter to pay down a line of credit which matures in January of 2015 and as of the date of this call we have $65.9 million in availability on our line available for new investments. Subsequent to September 30, 2012 we made two new investments with initial fundings of $5.5 million and had four early payoffs of syndicated investments totaling an aggregate of $21.1 million. Furthermore, we invested $0.7 million in three existing portfolio…

All right, good report, Chip. Now, let's turn to the financials for the fourth quarter and the year ending September 30, 2012. For that we will hear from David Watson, our Chief Financial Officer and Treasurer.

Good morning, everyone. Yesterday we released our earnings press release for our fourth quarter and fiscal year ended September 30, 2012 and this morning, our Form 10-K, which I hope you all had a chance to review in this limited time. On this call, I will provide a financial overview of the quarter and the year starting with the income statement. For our fourth quarter ended September 30, 2012, net investment income was $4.5 million or $0.22 per share versus $4.8 million or $0.23 per share for the same quarter last year, which was a decrease of 5.7%. This decrease was primarily due to an increase in dividend expense of $0.7 million on our term preferred stock for the quarter ended September 30, 2012, as no term preferred stock was outstanding in the fiscal year 2011. The increase in dividend expense was partially offset by the increase in other income on investments due to $1.2 million in success fees received in relation to an early payoff during the fourth quarter ended September 30, 2012 as compared to the prior period. For the year ended September 30, 2012, net investment income was $19 million or $0.91 per share versus $18.4 million or $0.88 per share for the year ended September 30, 2011, an increase of 3.4%. Net investment income increased primarily due to a combined increase interest and other income from investments for the current year offset partially by increased interest and dividend expense of $4.2 million compared to the prior year. Interest income on investments increased $3.2 million or 9.7% primarily due to an increase in the weighted average principal balance of our interest bearing debt investments of $35.2 million year-over-year, even though our portfolio decreased in size as of September 30, 2012 as compared to September 30, 2011. Other…

All right, very good report, David Watson, and I hope all our listeners will read our press releases and review our annual report on the Form 10-K which we just filed with the SEC. You can access the press release and 10-Ks on our website at www.gladstonecapital.com and also on the SEC website. I think the big news this quarter was the exit of two non-performing loans enabling our team to focus on the remaining portfolio and also the growth in net investment income even though it is 3.4% over the past year and 7.2% over the last two years. It's not great but it's going in the right direction. So we feel like we are doing the right thing here at the company. We received about $1.2 million in success fees in the fourth quarter and for the year ending 2012 of about $4 million. So, again, good success fee garnering from these loans that we have outstanding. Both of these are good points and good news for shareholders and our team and I think we can continue to produce good results as time goes on. The biggest challenge today is our access to long term capital market place. We have a line of credit. We have a very supportive lending institutions and that line of credit works fine and we believe it's sufficient for the near term but obviously we need long term debt and long term equity. In November 2011, we issued our new term preferred stock as a substitute for long term debt. It's worked extremely well. As a portion of the long term funding, we continue to seek those lending institutions that can help us with long term debt because at the end of the day, we are making long term investments so we need…

(Operator Instructions) The first question comes from Ryan Lynch from Stifel Nicolaus.

You guys deployed about $2.6 million this quarter in new investments. Was that a function of you guys not seeing deals of favorable terms because of froppy market conditions we have heard from other market participants?

This is Chip Stelljes. I would say yes. That’s definitely the case. So we have some internal and external statistics that we have been following for several quarters now. We saw more opportunities in the last six months than as a percentage of total deals that closed than we had in our previous two years. But a number of those got priced and structured in ways that we thought were not reflective of those solid risk returns. So I would say, yes, it's been very froppy. I would also say that, in general, talking with other market participants that there have been fewer opportunities. So therefore, just in general, more dollars chasing fewer opportunities period. I will also say some of this is just the lumpiness of the business, given our size, that one or two investments roll over through the following quarter. The quarter before this one we had sizeable new investment deployment. The quarter before that we didn’t have much. So a lot of its time, the deal is given that we are closing, two, three, four deals over a three and six month periods.

Okay.

Another question, Ryan?

Yes, kind of along the same lines. Because we had froppy market conditions in the big run up in the credit market, I see you guys reduce your syndicated loan portfolio to about $78 million from $91 million. Was that a function of you guys selling those syndicated loans in the strong credit markets? And if so, do we expect to see that in your fiscal Q1?

What's going on in that market place is very similar to what was going on 2006 and 2007? That is, people will come in, issue a good piece of debt. We like it. We buy it. A year later, they have grown a little bit more and the market place became stronger. So as a result they go back and get cheaper debt and usually they payoff the second lien debt that we might be holding and replace it with all first lien debt. So we saw multiple payoffs during the last year due, I think, primarily to the strength of the syndicated loan market place.

So we didn’t have any voluntary sales.

Okay, and then kind of a last and kind of a more broad-based question. In fiscal year 2012, you guys had some issues with new non-accruals and markdowns in the portfolio. So I was wondering what are you guys doing different in 2013 to help eliminate or reduce some of those issues going forward?

Well, a couple of things. I think as we noted in the script, almost all of our non-accrual issues, as a matter of fact, all of our non-accrual issues continue from our legacy portfolio originated prior 2008 and we are working through those. I would say the remaining non-accruals have all, I don’t say have all, but all feel like they have stabilized and you see some of the uptick in marks this quarter, certainly from a cash flow perspective. We have seen some of our companies that were in need of cash are now generating cash. So we will continue to work through the remaining non-accrual and work hard not to have new ones go in non-accrual. So I think the thing we are doing differently is just focusing on businesses that we think can withstand another significant downturn and that maybe one difference than how we are now underwriting versus how other who people don’t have a legacy portfolio are underwriting.

Other questions, Ryan?

No. That’s it. Thanks, guys.

Okay, do we have any other questions?

Yes, we have a question from Casey Alexander from Gilford Securities.

The $21 million that is listed as principal payments in the new quarter, are there any exit fees associated with those?

I don’t think there is.

No, it's almost all syndicated as well. All but $1.7 million are syndicated payoffs, as David described.

Okay, thank you.

Next question.

(Operator Instructions) All right, there are no more questions at the present time. So I will turn the call back over to management for any closing remarks.

All right. Thank you very much and we appreciate all the participation and again, if you have questions we have an 800 number. You can call in and ask questions. That’s the end of this conference call.

Thank you. That concludes today's teleconference. You may now disconnect your phone lines. Thank you for participating and have a nice day.