Good morning ladies and gentlemen and thank you for standing by. Welcome to the Ares Capital Corporation fourth quarter and year-end 2007 Earnings Call. I would now like to turn the conference over to Ms. Alison Sternberg, Vice President of Investor Relations for Ares Capital Corporation. Ms. Sternberg, please go ahead.

Thank you operator. Good morning everyone. Welcome to Ares Capital Corporation's fourth quarter and year end 2007 earnings conference call. I hope you have had an opportunity to review our earnings release and annual report on Form 10-K. In addition, we're offering a webcast and slide presentation to accompany our call. Copies of the earnings release, Form 10-K and the slide presentation can be obtained from our website at arescapitalcorp.com, under the Investor Resources tab. The earnings release is located in the Press Release section, the Form 10-K can be found in the SEC filings section and the slide presentation is located in the Stock Information section. Ares Capital Corporation's fourth quarter and year end 2007 earnings press release, Form 10-K, comments made during the course of this conference call and or accompanying slide presentation contain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934 and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends and similar expressions. Ares Capital Corporation's actual results could differ materially from those expressed in the forward-looking statements for any reason, including those listed in our SEC filings. Any such forward-looking statements are made pursuant to available Safe Harbor provisions under applicable securities laws and Ares Capital Corporation assumes no obligation to update any such forward-looking statements. Please note that past performance is not a guarantee of future results. Also, during this conference call the company may discuss core earnings per share, or core EPS, which is a non-GAAP financial measure as defined by SEC regulation G. Core EPS is the earnings per share from operations, less realized and unrealized gains and losses and adjusted for any incentive management fees attributable to such realized gains and losses and any income taxes related to such realized gains. A reconciliation of core EPS to earnings per share from operations, the most directly comparable GAAP financial measure, can be found in our earnings press release. The company believes that core EPS provides useful information to investors regarding financial performance, because it is one method the company uses to measure its financial conditions and results of operations. At this time, we would like the participants to access the accompanying slide presentation. As previously noted, you can access the presentation on our website at arescapitalcorp.com and click on the February 28, 2008 presentation link under the Stock Information section of the Investor Resources tab. I will now turn the call over to Michael Arougheti, our President.

Thanks, Alison, good morning everyone and thanks again for joining us this morning. I'm joined this morning by Rick Davis, our Chief Financial Officer; Alison Sternberg, who introduced this call, and other members of our senior Management team. We're very pleased with our 2007 performance and with our position in the current credit environment. Before we get into the specific details on the fourth quarter, I want to take a minute to summarize what we believe was a very successful year. Despite significant upheaval in the credit markets in the second half of the year, we had record originations of $1.3 billion in 2007. As we stated before, asset selectivity drives good investment decisions and generating significant deal flow is crucial to this investment process. Despite an overall decline in market activity in the second half of the year, we reviewed over 850 new issued transactions in 2007, compared to 675 deals in 2006. And consistent with our historical trend and demonstrating our discipline and patience, we closed on 47 of those deals in 2007 reflecting a closing ratio of approximately 5%. We also continued to build new and strengthen existing sponsor relationships and as of the end of 2007, 61 separate private equity sponsors were represented in the Ares Capital portfolio. Our balance sheet remains strong and during the year we demonstrated our ability to access diverse funding sources. We obtained investment-grade credit ratings to facilitate our eventual access into the public debt markets, we renewed our commercial paperbacked warehouse facility, we increased the borrowing capacity under our revolving credit facility. We raised over $355 million of public equity, and we closed Ivy Hill, a $400 million managed credit fund, which also expanded our asset management capabilities. Much of this activity came in at time when many other financing providers were having difficulty accessing funds to grow their platforms. As evidenced by some of our Q4 unrealized depreciation, we were not immune to the mark-to-market impact of the current credit market volatility. That said, the underlying credit quality of our portfolio remains very strong with less than 1.5% of the portfolio on non-accrual and cumulative realized and unrealized gains continuing to outpace cumulative realized and unrealized losses. And while we are seeing signs of a slowing economy, generally speaking revenues and earnings in the portfolio are growing. I will discuss the broader market and how it influences our business, as well as the opportunities we see looking forward through fiscal year 2008 a little bit later, before that Rick will cover our financial results. So Rick?

Thanks Mike. We have outlined the highlights of the fourth quarter on slide 3 of our presentation. Basic and fully diluted core EPS and net investment income were both $0.37 per share for the fourth quarter, representing a $0.03 increase over Q3. This increase was primarily driven by higher interest and fee income in the fourth quarter. Even though we generated higher core earnings in Q4 compared to the third quarter, our fourth quarter GAAP net income of $10.8 million or $0.15 per basic and diluted share was down sequentially from Q3, and was impacted by net unrealized depreciation on our portfolio investments. As you can see on slide 7, we had net unrealized appreciation of $19.5 million or $0.27 per share in the fourth quarter. Of the investments for which there was an unrealized depreciation adjustment booked, none of those companies were on non-accrual. During the fourth quarter, we also had $4 million or $0.05 per share of unrealized depreciation related to the reversal of prior period unrealized gains for investments realized in Q4. Our fourth quarter gross commitments totaled $476.8 million, and total exits and repayments, net of revolver commitments for $239 million, resulting in net commitments of $237.8 million for the quarter. Those exits and repayments included a $133 million of assets sold to Ivy Hill during the quarter. We closed the year with a $1.8 billion investment portfolio covering 78 portfolio companies. Excluding cash and cash equivalents, our year end portfolio was comprised of approximately 60% in senior secured debt securities, comprised of 39% in first lien and 21% in second lien assets, 23% in mezzanine debt securities and 17% in equity and other securities, which includes our investment in the Ivy Hill Credit Fund. The weighted average yield on our debt and income-producing equity securities…

Thanks Rick. Before commenting on the broader market and the opportunities we see looking forward, I want to provide a little color to our recent investment activity and portfolio positioning, both of which reflect our long-standing investment strategy and opportunistic response to the current investment environment. As I mentioned earlier, despite continued broader market issues, we have continued to generate healthy levels of deal flow. For example, we reviewed over 200 transactions during the fourth quarter, a pace consistent with the first three quarters of the year. This number does not include the many secondary capital markets transactions we reviewed in the quarter as well. This consistent level of deal flow, even through a period of dormant activity for some, is we believe a testament to our established self-origination platform, the benefits of the Ares Global Investment platform and our ability and willingness to invest in all levels of the capital structure, which sets us apart from any other financing providers. During the fourth quarter, we had record new commitments of $476.8 million across 18 portfolio companies. Thirteen of these investments were with new companies and five were with existing portfolio companies. Fifteen separate private equity sponsors were represented in these new transactions, with seven of those sponsors being new relationships for ARCC. Also during the fourth quarter we made three investments in non-sponsored transactions. Of these new investments, 58% were in first lien senior secured debt, 15% in second lien senior secured debt, 12% in our Ivy Hill Managed Fund, 7% in senior subordinated debt and 8% in equity securities. 77% of these investments bear interest at floating rates. During the fourth quarter, significant new commitments included $84.5 million in first lien senior term debt, revolver commitment and equity co-investments in a distributor of healthy juice products, $64 million…

(Operator Instructions) Our first question comes from Greg Mason at Stifel Nicolaus.

Good morning, gentlemen. First, a modeling question. The interest expense line looked significantly higher than the yield that you reported of roughly 6%. Were there any additional onetime fees for restructuring these credit lines or anything that flowed through that number?

No, it was really just a function of the average outstanding balance being higher. That was predominantly the reason for the increase. There was the slight increase in rates, but it was -- I think the average outstanding balance was $70 million higher in Q4 than it was in Q3.

Okay. And then what are you seeing on current yields today? And the reason why I asked the question is we analyze the potential of rights offering based on today's yield and your debt costs of capital. You're looking at a weighted average cost of capital of around 9.5% to 10%. How does that compare to what you're seeing in the marketplace today?

Let me talk about the junior capital environment, because as we mentioned that is where we're seeing the most attractive opportunity. The current market for both middle market and large market and mezzanine or private high yield is 2 points to 3 points upfront stated coupon of 12.5% to 15% and call protection of somewhere between two and four years with prepayment penalties of anywhere from 104 to half of the stated coupon scaling down. So the stated yield excluding fees, 12.5% to 15%; including fees, add 200 basis points to 300 basis points to that. And when you factor in the call protection, you're also seeing an additional 400 basis points to 600 basis points of total return opportunity. So I would leave it to you to think about how that would play out over a two to three-year period, but needless to say we're very excited about the investment opportunity and spreads relative to our cost of capital.

And just one last question to piggyback on that, how do you balance a rights offering between accretive NOI earnings versus declining book values?

Well, I think you have to look at book value, Greg, and try to separate and differentiate between unrealized depreciation and actual loss in the portfolio. We're going through a difficult time in the credit markets where technical pressures are putting a lot of downward pressure on book values, even in the face of solid underwriting credit performance. So I think you have to continue to drilldown and look at what is driving weakness in book value. Again, we believe that our mandate is to continue to grow this business accretively for our investors and to continue to grow our earnings and our dividend and having the ability to invest accretively is really the easiest way to reignite growth in the platform and to reignite growth in the dividend.

Okay. I'll hop back in for more questions.

Thank you.

Our next question comes from Carl Drake at SunTrust Robinson Humphrey.

Mike, can you here me?

Yes.

Good morning, and thanks for the presentation. I was wondering if you could provide a little bit more color about the comments that now the opportunity you're seeing obviously great investment opportunities that cost of funding is probably going up, obviously as well overtime. Maybe we could think about in terms of incremental -- you're going down the balance sheet pretty aggressively, it looks like in the first quarter. Should we be thinking about core EPS growth per share in '08 versus '07 kind of reigniting versus the strategy in '07, which was more of a defensive strategy?

Yeah, I think that's our goal, Carl. We have been playing defense for a long time and we actually expect the markets to improve for us as the year rolls on. We're letting our way in and continuing to focus on growing our earnings this year.

What type of incremental pickup do you expect over LIBOR this year? Is that something that perhaps -- I guess how fast and what kind of churn are you seeing on the portfolio as well?

So we don't expect material portfolio repayment this year. Ivy Hill is a good example of us looking for ways to creatively rotate the portfolio away from the lower yield floating rate assets. One thing, I did mention in our prepared remarks is that where we are being asked to provide floating rate capital, we're putting LIBOR floors in to protect the total return in what could be a continuing interest rate reduction environment. So if you want to look at current LIBOR and assume it's locked in at 300 basis points, the stated yield on the new investment portfolio is 1000 basis points, plus spread to LIBOR, which when you look across the cycle is pretty attractive.

Yeah, that is helpful. In terms of the credit, I think you had a number of great new companies. How many companies is that and what sectors are they in?

I am not sure that we've disclosed that. I would say that the grade two companies that are in the portfolio are company-specific issues, not industry specific issues. In terms of the number of companies that are graded two, I'd have to go back and look. But I recall the number being that we have two companies that are in the two category.

So, isn't that best kind of measure of health of your portfolio besides non-accruals? Was some of the depreciation in the quarter due to market multiples, or was it due to EBITDA, a slowing in EBITDA, or how would you characterize that?

I think it's a combination of both. In some of our names, it was just pressure on market multiples or a comp in the syndicated markets that caused a potential re-pricing of our security, and some of it was poor performance. I'd say it was a mix. But back to your point, Carl, I do think that the best proxy for overall health in the portfolio is looking at non-accruals and loans rated at 2. And as we mentioned, we only had one company that's currently rated 1, but we had two loans on non-accrual. So we tend to look at our basket of 1 and 2 as the companies that we're spending time with.

Our next question comes from Sanjay Sakhrani from KBW.

Thanks. Mike, I think you addressed the mix pretty well in terms of new originations, but what about size? I'm just trying to reconcile what some of your peers are saying on the smaller end of the middle market. And they have alluded to the fact that pricing hasn't really moved there and there's still a lot of competition. So I'm just trying to reconcile those comments.

We completely agree. Again, I think in our prepared remarks, we discussed what is an inversion of the middle market, historical middle market value proposition where a lot of the inefficiency and pricing structure was in the smaller end of the market because of the amount of liquidity in the larger market. Today, because of the CLO and other liquidity issues that we discussed, the investment in commercial banks that we're providing liquidity to larger companies are all but out of business. And so just to be clear, we actually agree. We think that the opportunity now is a unique one to invest in larger companies and larger dollar amounts at better yields than you can get in smaller companies today.

So that mix that you guys provided of the backlog, is that concentrated in fewer companies than historically?

It's still a lot of companies, but I would say that the average size of that company in our backlog is significantly in excess of what's currently in our portfolio.

Okay. And that would mean that their EBITDA profile etcetera is higher as well right?

That's correct.

Okay. And just drilling down on these non-accruals, I know it's probably in the K, but could you just discuss those in a little bit more detail?

Sure. We have two loans on non-accrual today. In both situations which we're somewhat pleased with, if you can be pleased when something is on non-accrual, the company actually has adequate liquidity to make the payments, but the payments have been turned over to the senior lenders. One of them is a company called Primus Marketing and the other is a company called Making Memories and we've been working closely with the company, the sponsor in both of those situations as well as the senior lenders to continue to rectify that situation.

Do you think there's a high probability of recovery on these?

I think that where we currently have our positions mark is a good mark. In any situation where stuff that goes on non-accrual, there's a process that you need to go through that takes a long time and a lot of preparation to recover value, but we are cautiously optimistic.

Okay, great. Just one other thing, I was actually looking through the 10-K and I saw this section on the cost list collar. So could you just explain that a little bit? I just want to make sure I understand it correctly.

Yes, Sanjay that actually has expired. It was something that was required of the commercial paper facility and it expired in January. And we had been looking at pricing on collars or some type of a floor on LIBOR and prices are pretty expensive right now. But that collar did expire in January.

Okay. So that sensitivity, it doesn't pertain to you guys right now?

That's correct.

Okay, great. Thank you very much.

Okay, thanks.

Our next comes from Daniel Furtado at Jefferies.

Good morning. Thank you for taking my call. Could you just talk to me about what you're seeing in -- what exposure you are seeing in the middle market syndicated loan market since year-end?

When you say our expose, meaning --?

No. I'm sorry, I didn't mean exposure, I'm just saying could you talk about the health, how that market is performing, if it's coming under the same type of stress that the large syndicated loan market has come under? And really I am looking more for since December 31st.

We're not seeing it. Again, there is a unique situation that we have not seen in our business before where the middle market remains very active. There is adequate capital available for smaller companies that are coming from the likes of GE Capital and others to get smaller deals done. The mezzanine need to those companies is able to get satisfied by a lot of the private independent mezzanine funds and BDCs as well. So that market feels a lot healthier right now than the broader syndicated loan and high yield market.

Okay, perfect, thank you. And then, could you talk about what the potential contingencies are? I know we have got a ways go before this revolver comes up for renewal, but just in terms of what you see in terms of strategies to clear that line of credit now that the CLO and structured term markets are shut down?

Sure. Just to reiterate, and we've given some detail on the liability side of our balance sheet, but I would call attention to the fact that our revolving credit facility comes due in December of 2010. So we have three years of runway there and the underlying on-balance sheet CLO comes due in December of 2019. We do have a CP-backed funding facility that comes due in October of 2008 and you will recognize in every quarter that that represents the least funded of all of our debt facilities, just given sensitivity to the short-term nature of that. I would also point out that in that facility there is no wind-down provision. It really turns itself out over a two-year period. So when we look at our balance sheet relative to our peers and even some of the private finance companies, we're just not feeling the liability side pressure that other people are. Now looking forward, we believe very strongly in diversifying our funding sources. That's why we went out and got an investment-grade rating. We think that we're well positioned to issue a public or private unsecured notes deal. And we hope as we demonstrated in November by getting Ivy Hill done that our CLO and capital markets franchise puts us to the front of the line in the structured products market to get funded when that market reopens.

Okay. So I guess in a worst case scenario, you could just let that CP facility term out in kind of like a pseudo structured --?

Yeah, that's correct, although nobody can predict the future, but I am hopeful that won't happen.

Right. I understand. I'm just looking for kind of like the down, down side here. Thanks for the comments and the clarity. I appreciate it. Have a great day.

Thank you.

Our next question comes from Vernon Plack at BB&T Capital Markets. Vernon Plack - BB&T Capital Markets: Thank you, Mike. Just a couple of questions, I'm trying to get a sense for your thoughts on net portfolio growth for '08, you look at commitments net of exits and repayments in '07, this number was just under $700 million, in '06, it was just over $700 million. What are your thoughts in terms of the type of net growth you have seen in '08?

Again, I think we've returned to a normalized investment pace after what was a brief low in the third quarter, and I would even say a somewhat self-inflicted lull in the third quarter, in this market. My enthusiasm wasn't made clear, I think we would like to be as active as we possibly can be over the next four quarters and beyond. So really the investment pace is going to be a function of capital availability more so than market opportunity. Vernon Plack - BB&T Capital Markets: Sure.

But suffice to say, I think it should be consistent with our historical experience and depending on how capital availability plays out over the year, it could be higher. Vernon Plack - BB&T Capital Markets: Okay. And just one other question. I'm trying to get a sense for the magnitude that you would like to see the portfolio shift away from senior secured both first and second lien. You ended the year at about 60%. Where do you hope that number is at the end of the year?

Yeah, we don't know because it's always a function of what the available returns are in the relative markets. But order of magnitude, I can see our first lien portfolio getting down to 25% of the portfolio and then the second lien and the mezzanine making up the significant majority beyond that. One of the things I do want to highlight and it is somewhat different than some of our BDC peers; the senior debt asset class is a critical component of our go to market strategy. We believe that it provides us an origination advantage by being able to go out and originate senior debt. We feel that we see a broader opportunities ahead. So we will not be abandoning that market. We have not slowed our originations in that market. I just think that you will see us more aggressively syndicate our exposure there and look to grow the Ivy Hill portion of our business in order to manage our balance sheet exposure. Vernon Plack - BB&T Capital Markets: Okay, thank you very much.

Sure.

The next question comes from Jon Arfstrom from RBC Capital Markets.

Good morning.

Good morning.

Rick, can you give us the fees for the quarter that you generated from Ivy Hill?

Ivy Hill for this quarter was a fairly small amount just because it ramped up in November. So the number was less than a couple hundred thousand in 2007. Fully ramped, that fee should equate to a couple million a year once the fund is fully ramped.

Okay, that's the $400 million?

Yeah, the 50 basis points on $400 million once it's fully ramped up.

And then, Michael, you made a comment early in your prepared comments about how revenues and earnings are still growing at your portfolio of companies. Is there anyway to quantify that and talk a little bit about how that changed or if it has changed over the last few quarters?

We don't do specifics, but I'd make two comments. One, it is growing year-over-year but the rate and pace of growth is slowing. And again, generally speaking we see this across the market and across other portfolios as well. What we are seeing is, despite year-over-year growth people are falling short to expectations; i.e. companies had set aggressive budgets and are either not beating them as handily as they had been or starting to miss them, which is obviously the natural progression of the credit cycle. One of the reasons that we pursue a senior debt strategy in certain parts of the market is you want to be in a position to reprie your risk and take control of a situation when a company's growth slows and it starts to fall short of expectation. So that's not unto itself concerning to us. It's actually quite favorable as we think about our position at the top of the capital stack. I would say that what we're seeing in our portfolio is similar to what you're seeing in the public equity markets, which is good single-digit growth but shortfalls to expectation.

Okay, great. Thank you.

Our next question comes from Greg Mason of Stifel Nicolaus.

Thanks. Mike, I wanted to get your opinion. In talking to some institutional clients about competitive advantages versus internal and external BDCs, we have seen ACAS and now Allied do some external funds via the private equity markets. I know you guys did Ivy Hill on the debt side. What is your ability to do some other funds given that your overall management company has their own private equity division and some of these other divisions? Does that limit you in any way from an external management standpoint?

In theory, no, there's no regulatory restriction on that. In practice it really depends on the asset class and the size of the underlying companies that we're investing in. We believe that our core mandate is to provide capital to middle market companies at every level of the balance sheet. Our hope is that we can continue to grow our balance sheet to satisfy the needs of those issuers and those clients. As you mentioned, Ares Management is a very large and growing asset manager in its own rights. But none of the existing businesses at Ares Management compete with Ares Capital Corporation or vice versa and we don't intend to see that change. So we're constantly looking for ways to grow our business on balance sheet, we're constantly looking for ways to grow our franchise, but there is no view here that we're going to be in businesses at ARCC that we're in at Ares Management.

And then with your pipeline, does that include some assets for Ivy Hill that you may not normally look at yourself?

The pipeline, as stated, does not include situations that would be for Ivy Hill only. But as part of a syndication strategy, Ivy Hill would be a very logical third-party buyer of some of the underwritten senior loans that were in our backlog and pipeline.

Okay. And then based on what you are seeing in the bank loan market, how quickly do you think Ivy Hill can get up to your $400 million cap?

Well, how quickly can it, or how quickly will it, I think the answer. Quickly, how quickly could it? The answer would be, yesterday. There's really no shortage of opportunities to buy senior secured debt at very attractive risk return right now. Just booking at the large market to put the dislocation in perspective, the average bid in the syndicated loan market in hovering somewhere between 88 and 90 today, which when you look at the discount margin would imply spreads of 400 to 450 basis points and default implications in excess of 14%. So there is a major technical dislocation in the bank loan market that Ivy Hill is benefiting from. That said, we don't see anything that's going to be a catalyst for change in that market in the near term, so we're being a little bit more judicious about how we invest that funds than the current market opportunity may indicate. So another couple of months I would say if we maintain our current investment pace.

Would it be appropriate to look at Ivy Hill in the near term as beneficial for you for enabling you to do deals that maybe if Ivy Hill wasn't there you could do, or do you just want to get Ivy Hill filled up as fast as you can?

Ivy Hill is strategic for a number of reasons, and I would refer you back to some of our disclosures around that fund in our conference call at the time that we closed the fund. But it is a very strategic element to our business because in an environment like the one we're in now where spreads down the balance sheet on a total return basis are much more attractive than senior debt, it gives us an opportunity to continue to be actively underwriting and originating at the top end of the balance sheet without having to defer our balance sheet capacity away from the more attractive mezzanine asset class. At the same time as an equity holder in Ivy Hill as we said in our prepared remarks, we couldn't do more excited about the prospects for that investment relative to our original expectations for the fund.

Could we spend just a little bit of time talking about your largest investment, FirstLight? We have read some articles that they laid off roughly one-third of their employees, but still with 40 employees remaining on kind of $1 billion capital fund, it seems pretty top heavy. What are your thoughts there?

It's a fluid situation. As I mentioned, the first part is well capitalized relative to other finance companies. It has no exploding warehouse lines or liquidity issues, so it does have the luxury of time that maybe some other people in that business do not have. And we think the management there is best in class and when you look at their track records, they have managed multibillion dollar businesses on larger platforms. So I think we have the right formula there for success. The challenge is nobody is immune from what is going on in the current credit market and we're constantly looking at the growth opportunity at FirstLight relative to availability of capital. So the reduction in force that occurred awhile back was really just a recognition that the growth opportunity given capital availability is not what we had hoped it would be and we need to right-size the infrastructure to maintain profitability at that company as well as the return profile of our investment and it's something that we continue to dialogue about.

One last question. I've always kind of struggled with when we see situation like this, an MPBP where we had a write down to both the equity and junior notes, but there is still equity value even though we've written down two junior notes as well. How do we have equity value but expecting losses on junior debt?

It is a good question, and I think you strike to the very heart of the matter of valuing equity securities versus valuing debt securities. It is something that people are obviously spending a lot of time on. There is a number of ways that we and third-party valuation providers look at value both looking at bond yields, market comps, public equity comps, DCS, performance against original budget, etcetera, etcetera. So there's number of data points that go into valuing private securities as well as public securities for that matter. At any level, you get to a place where equity has optionality embedded in it where you can see equity still has value below what a debt comp we're tell you your debt is worth. I think that MPBP is a perfect example of one of the companies in our portfolio where because of the technical dislocation in the syndicated loan market it put pressure line our junior debt security as well as our equity.

Okay. So it sounds like you're already implementing FAS 157. What do you think the impact is going to be next quarter as we move into that environment?

We don't anticipate a meaningful change in the way that we go about valuing our portfolio. Obviously we're spending a lot of time with our valuation providers, auditors and Board talking about the implications of FAS 157. We run a pretty robust process here from a valuation standpoint, and today don't anticipate any meaningful changes to the way that we are valuing our portfolio. That said there is some inconsistency in the market today as to what the impact is going to be and we're trying to be a part of that dialogue just to make sure we're out ahead of it. But as we sit here today, we don't anticipate meaningful changes.

Great, thank you.

Our next question comes from Vernon Plack of BB&T Capital Markets. Vernon Plack - BB&T Capital Markets: Thank you, Mike, just a follow-up question on, I know you mentioned in your prepared remarks that you expect this year to be a year in which you realize capital gains, but just trying to get a sense for and perhaps a little more color on that point, particularly looking at the portfolio and knowing that most of the portfolio is not in control investments. If you could provide a little more color, that would be helpful.

Yes. We obviously look at the underlying earnings momentum at some of the companies in our portfolio. Even though we're not a control investor, a lot of the equity investments we make as you know come alongside of debt investments and where we have meaningful debt and equity exposure we tend to have access to the Board of Directors either as a board member or a board observer. And I believe at the end of the year, roughly 40% of our portfolio we had access to the Board of Directors. So when we look at the strategic direction that those businesses are going in and in sponsored situations the thought process on behalf of the institutional sponsor we can identify certain situations where we think people will be looking for liquidity. Vernon Plack - BB&T Capital Markets: Okay. Is there any thought in terms of -- are you looking to realize a certain amount of gains this year for either dividend coverage purposes or just don't know what the philosophy is there?

Yes, we have always said, our hope is in a worst case, our capital gains should always outpace our losses and in a steady state our core earnings should cover our dividend. When you look at our historical performance you will notice that certain times our core EPS covers our dividend, certain times it doesn't, and that's really a function of where we are in our capital raising and capital deployment. One thing that we have demonstrated is that capital gains have significantly outpaced our capital losses both on a realized and unrealized basis. So as a philosophy and a dividend philosophy we do not rely on capital gains to maintain our dividend stability and dividend trajectory. Rather, we factor that in on an ongoing basis as to what kind of momentum we have in our dividend and our earnings profile. Vernon Plack - BB&T Capital Markets: .:

Our next question comes from Elliott Berk of Ironside Partners.

Hi, thanks. I just wanted to ask a couple of questions about the leverage side of your balance sheet. First on the revolving credit facility, it matures in 2010 but is there any kind of renewal provision, annual renewal provision, or something of that sort that needs to -- where the banks actually need to approve the facility continuing on?

No, there is not.

Okay. Also on the same one, the same revolving credit facility, I know it's a ways off, but just curious how these work. Is there a similar kind of amortization provision in that facility or does it all come due on maturity if in principle the banks don't choose to renew it?

I believe so. I'd have to go back and refresh my knowledge of the document, but I believe that it terms out.

Okay. And my last question, the commercial paper facility. Asset-backed commercial papers have been one of those four-letter word buzzwords in the financial markets recently. I'm just curious, I know some facilities, some commercial paper facilities of that sorts have been doing fine and some obviously had lots and lots of problems. What's the status of that Wachovia commercial paper facility and relative to the potential for it to be renewed when it matures later this year?

Yeah, again we cannot comment on the health of Wachovia's balance sheet, but what we can comment on is the strength of the relationship. And in November of '07, which was arguably a very turbulent market, we renewed that facility early and on time with only a slight increase in pricing. We have a very strong relationship with the bank. We do a lot of business with them and I think we're in very good standing there. So again, I can't predict what's going to happen in October, but I think given the franchise that we have here and given the strength of the relationship that I currently don't feel like that is in jeopardy. The only thing I'd say, it's a bank supported conduit, not an asset-backed conduit so we do take some comfort that Wachovia's balance sheet is standing behind the conduit facility.

Okay, thanks. Actually more question, the potential for a rights offering, when you think about that, is there sensitivity relative to the price that the rights would be struck? The price, you would be effectively selling shares at, or do you think about or do you look at it as it's going to existing shareholders, they'll get the rights, they'll have the ability to exercise and therefore capture some of that value, even if the share price that we're selling at is somewhat lower than we'd like to sell it at?

I think first and foremost we have to do what is right for our shareholders. And given what we're seeing in the current environment, we feel that an appropriate strategy to consider is continuing to grow the business. If you can invest in yields that are accretive relative to whatever dilution you would incur in a rights offering, that's something that we spend time on. So the corporate finance analysis would tell you that there's obviously a level at which that equation doesn't make sense anymore. However, in a pro rata rights offering where the rights are transferable, we do believe that appropriate protections are in place for the existing shareholders that want to participate in the potential growth opportunity, and for those that don't to capture value of the right by selling the right. So, of all of the mechanisms that we can think of, I think a transferable pro rata right protects the interest of all shareholders,

Okay. That makes sense. So thanks for the answers and keep up the good work in a difficult environment.

Thank you.

Mr. Arougheti, at this time, I show that there are no further questions. Please continue with your presentation.

Okay. Thank you very much. We had no further prepared remarks. We appreciate everybody taking the time today and appreciate the good questions and dialogue. And as always we look forward to speaking with you guys on our next quarterly call. Thanks again.

Ladies and gentlemen, that does conclude our conference call for today. If you missed any part of today's call, a recording of this conference will be available until March 13, 2008, through March 13, 2008. To access the replay, you can call 1-877-344-7529. To call internationally, you can call 1-412-317-0088. For all replays, please enter conference ID number 416243. Thank you for your participation and you may now disconnect.