Good afternoon, ladies and gentlemen and welcome to the KCAP Financial Inc. Second Quarter 2012 Earnings Conference Call. An earnings press release was distributed on Wednesday, August 8, 2012. 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. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, August 9, 2012. This call is also being hosted on a live webcast, which can be accessed at our company's website, www.kcapfinancial.com in the Investor Relations section under Events. In addition, if you would like to be added to the company's distribution list for news events, including earnings releases, please contact Denise Rodriguez at (212) 455-8300. Today's conference call includes forward-looking statements and projections and we ask that you refer to KCAP Financial's most recent filings with the SEC for important factors that would cause actual results to differ materially from those 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, KCAP Financial. Mr. Pearson, you may begin.

Thank you, all, for joining KCAP Financial for a review of its second quarter 2012 financial results. I will open the call with some broad commentary about important highlights and activities during the quarter, including the impact of our financial results of our acquisition of Trimaran Advisors earlier this year, and we'll then discuss our investment portfolio in more detail. I will then turn the call over to our Chief Financial Officer, Ted Gilpin, to provide a recap of our 2012 second 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. So let me first provide a brief recap of some important highlights in the second quarter. In the second quarter, our NII increased from $0.15 in the first quarter to $0.23. This resulted in an increase of our dividend by 33% to $0.24 per share. The second quarter marked our first full quarter following our February 29, 2012, acquisition of Trimaran Advisors, and the acquisition was an important factor behind our increased dividend and investment income. As you will recall, as part of the acquisition, we purchased equity positions in 4 CLO funds managed by Trimaran for a cash purchase price of approximately $13 million. Distribution to us from these funds contributed approximately $1.4 million to our total investment income for the second quarter. Aside from the acquisition of the equity interest, we also purchased the Asset Management business of Trimaran Advisors, which was responsible for an increase in the periodic dividends we have received from our 2 asset manager affiliates, from $825,000 in the first quarter to $1.2 million in the second quarter of 2012. Our other asset manager affiliate is Katonah Debt Advisors. Trimaran should generate approximately $3.6…

Thank you, Dayl, and good afternoon, everyone. I'll first go cover some high-level financial information and then go into a little more detail on specific metrics. As of June 30, 2012, our NAV stood at $7.66 per share as compared to $7.78 at the end of March 2012. Decrease can be attributed to a net negative realized and unrealized mark-to-market loss of $4.4 million on our investments in the second quarter. The company declared a dividend of $0.24 a share for the second quarter of 2012 as compared to $0.18 a share for the second quarter of last year. The vast majority of the increase can be attributed to the full integration of our first quarter acquisition of Trimaran Advisors. Component pieces of the dividend can be found in our operating results for the 2012 second quarter. First, interest income for the 3 months ended June 30, 2012, was $2.7 million or $0.10 per share compared to $2.1 million or $0.09 per share for the same period of 2011. The increase can be attributed to more invested assets. Second, dividends from the investments in CLO securities was $5.5 million, or $0.21 per share in the second quarter of 2012 compared with $3.3 million and $0.14 per share in the same period of 2011. The majority of the increase can be attributed to the acquisition of the equity in the 4 Trimaran CLOs. And finally, the third revenue component, as stated earlier, our asset manager affiliate dividend is up to KCAP Financial $1.2 million or $0.05 per share in the second quarter of 2012 as compared to $650,000 in the second quarter of 2011, or $0.03 per share. The increase resulted from our acquisition of Trimaran Advisors in early 2012 and the respective net asset and further net asset management fees…

[Operator Instructions] Our first question comes from Greg Mason of Stifel, Nicolaus. Greg Mason - Stifel, Nicolaus & Co., Inc., Research Division: To take a look at the asset manager, you have $1.2 million this quarter. I believe you said you've got $3.65 million of base management fees for the remainder of this year, so that would be about $1.8 million a quarter. How much of that do you expect to flow through of that $1.8 million to the BDC? Obviously, you've got to cover your expenses at the asset manager, what should we be thinking about in the second half of this year?

Well the $3.6 million I mentioned refers to just the Trimaran fees, I was talking about what the acquisition brought to the table. So in addition to that $3.6 million, KDA should be probably around $4.3 million or $4.4 million. In terms of what we think we'll be able to dividend over the next two quarters, I think $1.2 million is probably a good starting point, we think there's maybe a little bit of upside in that. It also depends upon if we get any incentive fees in the fourth quarter from some of the Trimaran funds. Greg Mason - Stifel, Nicolaus & Co., Inc., Research Division: And as we think about those incentive fees in 2013, any color on how we should think about trying to calculate or quantify the incentive fees to the manager and ultimately to the BDC?

That's a great question. I think -- my guess is -- we're excited about the amount of the incentive fees per quarter 2013. It's somewhat a function of performance over the next couple of quarters. We know they're going to be earned. The question is exactly how much is that going to be. I think we'll probably have more color on that, but I wouldn't be surprised of seeing $1 million a quarter in 2013.

I think that's a good proxy.

That's a good proxy. But again...

It depends a little bit about when turns on it and when it...

The problem is when you -- exactly when you meet the hurdle and then the money starts to kick in. So it depends upon how much of sub fees we take in fourth quarter 2012 or if it's not even a first full quarter until first quarter of 2013. But I would say roughly $1 million a quarter in 2013 is probably a good guesstimate. Greg Mason - Stifel, Nicolaus & Co., Inc., Research Division: And then, about your leverage, what is your target leverage that you look for, for your balance sheet?

I think we've talked in the past about, depending upon the form of the leverage, somewhere between in sort of 0.5x and 0.7x our NAV. The more we have in longer-term fixed rate leverage, I think, the more comfortable we are with having a slightly higher ratio. But sort of in that ballpark.

[Operator Instructions] Our next question comes from John Hecht of Stephens.

It seems like credit quality is pretty stable, Dayl. Anything on the watch list or any trends you're seeing in the portfolio worthy of mentioning?

Yes, I think by and large, you're correct. It's been fairly stable there. There are 1 or 2 names which we're watching closely, especially those which have reliance on state and local government expenditures, which obviously, are under a lot of pressure. In terms of overall cyclicality, we're really not seeing -- we don't have that many cyclical names [ph] but the ones that we do have, have been relatively stable. So we're not seeing a major impact from the economy right now. It's more other sort of one-off factors.

Okay. And then it sounds like you're looking to issue a new CLO out of the Asset Management division. What -- structurally, what changes do you expect to see, whether it's over-collateralization or equity tranche levels or rates versus the CLOs that may be done prior to the recession?

A lot of it's sort of minor structural changes which are a bit esoteric. But really, the biggest difference is the cost of debt. The cost of AAA's in the other '06 and '07 funds is somewhere between 23 and 25 basis points over LIBOR. What's getting done so far this year has ranged anywhere from a low of 130 basis points over LIBOR to more recently, 145 to 150. We expect that to come down a bit, but that's -- the leverage is -- leverage levels really haven't changed much. It's really just the cost of funds. On the other hand, obviously, those go hand-in-hand -- the returns on the assets are also higher than the initial assets that were in the funds that we now manage. But the real driver of new CLO issuance is the cost of the AAA's because that's 70% to 75% of the capital structure.

Our next question comes from JT Rogers of Janney Capital.

First question on the $1 million per quarter run rate next year on the incentive fees, is that net of lower income flowing through to the income notes and preferred shares of the Trimaran CLOs?

Let me be clear. We're not providing guidance, we're providing sort of a bit of guesstimate. And again, if that $1 million fee we're talking about, that would probably result in something like $150,000 to $175,000 reduction in the CLO distribution. So net, it's still a significant contributor but -- and again, it's not guidance, it's just a guesstimate.

Okay, great, that helps. And in terms of the CLO issuance, would you all retain all of the equity in a potential CLO issuance or would you look to parcel that out to other buyers?

We would not, based upon guidance we've gotten from counsel, we would probably more likely target something around 25% retention of the equity tranche. The SEC has not really come down in terms of where they feel consolidation of the entire liability structure would be warranted, but we think if we stay at 25% or so, we -- the guidance we've gotten from counsels in that sort of appropriate place to be. And so, we would look for partners to fill out the other 75%, and we've been in the process of doing that over the last couple of months.

Is there any hurdle in terms of where the spreads for the AAA tranche needs to go before you -- there's a big appetite for partners in the equity tranche?

Not really. I mean, I think there are a number of people out there who either have specialized funds or who have an allocation to invest in this and I think they're looking at the overall returns on the fund, not necessarily just the pricing of the AAAs. So if you have assets and liabilities, sort of the same sort of relative sort of higher pricing structure, they're looking at total returns at IRR. As are we, obviously.

I was thinking to the extent that lower spreads to the AAA that affects your expected IRR for the equity?

Yes, remember, what happens is when the AAA pricing goes down, the pricing on loans gets pushed down too. So again, you're not locking in the spreads on the loans. So -- and the loan spreads won't move around while you've locked in your spread on the AAA.

[Operator Instructions] I'm showing no further questions at this time, I'd like to turn the conference back over to Mr. Dayl Pearson for any closing remarks.

I don't have any other remarks, but I appreciate everyone's being on the call this afternoon. And we look forward to talking to you again soon. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may all disconnect and have a wonderful day.