Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Saratoga Investment Corp.'s Fiscal Second Quarter 2013 Financial Results Conference Call. Please note that today's call is being recorded. [Operator Instructions] At this time, I'd like to turn the call over to company's Chief Financial Officer, Mr. Rich Petrocelli. Sir, please go ahead.

Thank you. I would like to welcome everyone to Saratoga Investment Corp.'s Fiscal Second Quarter 2013 Earnings Conference Call. Before we begin, I need to remind everyone that this conference call contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Actual outcomes and results could differ materially from those forecasted due to many factors, which are described in the company's filings with the U.S. Securities and Exchange Commission. We do not undertake to update our forward-looking statements unless required to do so by law. A replay of this conference call will begin -- will be available from 7 p.m. today through October 22. Please refer to our earnings press release for details. I would now like to introduce our Chief Executive Officer, Christian Oberbeck, who will be making a few introductory remarks.

Thank you, Rich, and welcome, everyone. In the second quarter of 2013, our financial strength and growing pipelines have enabled us to make significant investments, including the addition of 3 new portfolio companies. The credit quality of the portfolio has continued to improve as we have increased both the amount and proportion of internally rated strong credits. As we look at our going pipeline, we continue to see and harness opportunities for investment in leveraged loans and mezzanine debt issued by U.S. middle-market companies. I will return shortly with the review of our portfolio, but I would now like to turn the call back over to Rich to review our financial results.

Thanks, Chris. Saratoga Investment Corp.'s net investment income for the fiscal second quarter ended August 31, 2012, was $1.3 million or $0.34 per share. Net gain on investments was $3.6 million or $0.92 per share, resulting in a net increase in net assets from operations of $4.9 million or $1.26 per share. Net asset value per share was $27.20 as of August 31, 2012; $25.94 as of May 31, 2012; and $25.12 as of February 29, 2012. Our total investment income for the quarter was $4.2 million, an increase of approximately $625,000 or about 18% compared to the fiscal second quarter of 2012. Our investment income was comprised primarily of $3.5 million of interest income and approximately $500,000 of management fee income associated with the investment in the CLO. Our total operating expenses were $2.8 million during the quarter. It consisted of $653,000 in interest and credit facility expenses; $505,000 in base management fees; $293,000 in professional fees; $869,000 in incentive management fees; $130,000 in insurance expenses; $250,000 in administrator expenses and $148,000 in director's fees and expenses, general administrative and other expenses. In the 3 months ended August 31, 2012, total operating expenses compared to the 3 months ended August 31, 2011, were higher by more than $2 million. Total operating expenses in the prior fiscal quarter were offset by the reversal of $1.1 million in accrued capital gain incentive fee expense. On August 31, 2012, we had $14.9 million of borrowings under our $45 million revolving credit facility with Madison Capital and $6.4 million in cash and cash equivalents. As of August 31, 2012, the company's Small Business Investment Company subsidiary had $25 million in regulatory capital and no SBIC debentures outstanding. With the $45 million credit facility and up to $150 million in borrowing capacity at the SBIC subsidiary, Saratoga Investment has a $195 million total borrowing capacity. That concludes my financial review. I will now turn the call back over to Chris.

Thanks, Rich. Before we open for questions, I'd like to review the composition and performance of our investment portfolio. At the quarter ended August 31, 2012, fair value of the company's investment portfolio was $115.7 million, principally invested in 22 portfolio companies and 1 CLO fund, with $404.9 million of assets under management. Saratoga Investments portfolio was composed of 49.8% first lien term loans; 8.5% second lien term loans; 9.2% senior secured notes; 1.7% unsecured notes; 7.4% of equity interests and a 23.4% of subordinated notes of a CLO. During the 2013 fiscal second quarter, Saratoga Investment Corp. invested $14.9 million in new or existing portfolio companies and had $10 million in aggregate amount of exits and repayments, resulting in net investments of $4.9 million for the quarter. Of the CLO, Saratoga invested $43.8 million in new or existing portfolio companies and had $36 million of exits and repayments. The company's new investments during the quarter included C.H.I. Overhead, National Truck Protection, TM Restaurant Group, and the follow-on investment in DS Waters. In closing, I would again like to thank all of our shareholders for their ongoing support. We're excited about the growth and profitability that lies ahead for Saratoga Investment Corp. I would now like to open the call for questions.

[Operator Instructions] Our first question here in queue comes from Greg Mason with Stifel, Nicolaus.

First, a modeling question. On the $869,000 of incentive fee, how much was that related to that cap gain accrual versus a straight NOI incentive fee?

Related to NOI, it was approximately $300,000 and the remainder capital gain.

Okay, great. And then can you talk about the yield you were seeing on the new investments versus what were the yields on the loans that paid off on the balance sheet portfolio?

Saber paid off during the period. Saber and Advance Lighting. Saber had a mid-teens yield and Advance Lighting had a 6% yield.

The new investments that were made this quarter were TM Restaurant Group, that's 7.75%; CHI Overhead was 7.25%; National Truck Protection was 15.5%, the Small Equity Investment, along with that; and then we had a follow-on in DS Waters, which is roughly 10.5%.

All right. And then the follow-on in DS Waters, was that just an ability to buy that paper even more cheaply in the marketplace than the original investment earlier this year? Can you talk to us what's going on there, and why you made a subsequent investment in it?

It was about the same price. Our investment in DS Waters total is now $3.99 million. Still slightly less than a full allocation for us. We invested additional $1 million during that quarter to get to $3.99 million. It was roughly the same price.

Okay. So nothing really changing in that business?

Nothing really changing. The first opportunity that to enter that investment was the $2.99 million, and then we had the opportunity to acquire additional $1 million and decided to do that.

Okay, great. And can you talk about what appreciate the main drivers of the portfolio appreciation this quarter?

The main driver is the targets equity. The results have been quite strong in that company, as well as the comparable set has performed very well. And targets was about a million of the write up for the quarter, and then the CLO is -- was about $2 million.

Great. And then in terms of CLO increasing in value, what was the primary valuation drivers, lower credit losses, better spreads, what's making the big movement there in valuation?

The big driver there, at least, this quarter that CLO has continued to be a very strong performer for us. The dynamics of the CLO internally have really not changed too much over the past few quarters, but from a comparable transaction standpoint, equity values have been -- have risen significantly. We're still on the low-end of the range where this thing -- where the valuation on this came out and really largely driven by comparable transactions, discount rates increasing pretty significantly for CLO equity.

[Operator Instructions] Presenters, I'm showing no additional questions on the phone queue. I'd like to turn the program call back to over to Chris Oberbeck for any additional or closing remarks.

Okay. Thank you. Well, thank you everyone for joining us today. We look forward to speaking with you next quarter.

Thank you, sir. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation, and have a wonderful day. Attendees, you may disconnect at this time.