UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-K/A
(Amendment No. 1)

 

x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to          

Commission File No. 814-00735

 

Kohlberg Capital Corporation

(Exact name of Registrant as specified in its charter)

Delaware		20-5951150
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

295 Madison Avenue, 6^th Floor
New York, New York 10017

(Address of principal executive offices)

(212) 455-8300

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of exchange on which registered
Common Shares, par value $0.01 per share		The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.Yes o No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer x		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes o No x

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2011 was approximately $152 million based upon a closing price of $7.95 reported for such date by The NASDAQ Global Select Market. Common shares held by each executive officer and director and by each person who owns 5% or more of the outstanding common shares have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of common stock of the registrant as of March 1, 2012 was 23,009,963.

This Amendment No. 1 (this “Amendment”) is being filed to amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which Kohlberg Capital Corporation, a Delaware corporation (the “Company” or “we”), originally filed on March 15, 2012 (the “Original 10-K”). We are filing this Amendment solely for the purpose of correcting the date of the reports of Grant Thornton LLP, the Company’s independent registered public accounting firm, set forth on pages F-2 and F-3 of the Original 10-K (the “Reports”), and to correct the date of the Reports referred to in the consent of Grant Thornton LLP included as Exhibit 23.1 to the Original 10-K (the “Consent”). The Reports were signed by Grant Thornton LLP and dated March 15, 2012, but the dates included in the Original 10-K were inadvertently reflected as March 15, 2011 in the Reports (and March 14, 2012 in the Consent).

All of the financial statements included in this Amendment are unchanged from those included in the Original 10-K.

In connection with filing this Amendment, and pursuant to Rules 12b-15, 13a-14(a) and 13a-14(b) under the Securities Act of 1934, as amended (the “Exchange Act”), the Company is also filing a corrected copy of the consent of Grant Thornton LLP dated March 15, 2012 related to its reports with respect to the financial statements and internal control over financial reporting of the Company, a copy of the consent of Grant Thornton LLP dated March 15, 2012 related to its report with respect to the financial statements of Katonah Debt Advisors, L.L.C., and currently dated certifications of the Company’s principal executive officer and principal financial officer pursuant to Rules 13a-14(a) and 13a-14(b) under the Exchange Act. Except as described above, no other amendments are being made to the Original 10-K. This Amendment does not reflect events occurring after the filing of the Original 10-K or modify or update the disclosure contained therein in any way other than as required to reflect the amendments referred to above. This Amendment should be read in conjunction with the Original 10-K and the Company’s other filings made with the Securities and Exchange Commission subsequent to the filing of the Original 10-K on March 15, 2012.

PART II

Item 8. Financial Statements and Supplementary Data

Our financial statements are annexed to this Amendment beginning on page F-1.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)  Documents filed as part of this report:

1.  For a list of the consolidated financial information included herein, see Index to the Consolidated Financial Statements on page F-1.

2.  For a list of the other financial statements and financial statement schedules included herein, see Index to Other Financial Statements and Financial Statement Schedules on page S-1.

3.  For a list of other exhibits included herein, see Exhibit List on page E-1.

(b)  Exhibits required by Item 601 of Regulation S-K.  Reference is made to the Exhibit List filed as a part of this report beginning on page E-1. Each of such exhibits is incorporated by reference herein.

(c)  Other financial statements and financial statement schedules.  Reference is made to the Index to Other Financial Statements and Financial Statement Schedules on page S-1. Each of such documents is incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Kohlberg Capital Corporation
Date: March 22, 2012		By /s/ Dayl W. Pearson Dayl W. Pearson President and Chief Executive Officer

INDEX TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm			F-2
Balance Sheets as of December 31, 2011 and December 31, 2010			F-4
Statements of Operations for the years ended December 31, 2011, December 31, 2010 and December 31, 2009			F-5
Statements of Changes in Net Assets for the years ended December 31, 2011, December 31, 2010, and December 31, 2009			F-6
Statements of Cash Flows for the years ended December 31, 2011, December 31, 2010, and December 31, 2009			F-7
Schedules of Investments as of December 31, 2011 and December 31, 2010			F-8
Financial Highlights for the years ended December 31, 2011, December 31, 2010 and December 31, 2009			F-18
Notes to Financial Statements			F-19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders of
Kohlberg Capital Corporation

We have audited the accompanying balance sheets, including the schedule of investments, of Kohlberg Capital Corporation and subsidiary (collectively, the “Company”) (a Delaware corporation) as of December 31, 2011 and 2010, and the related statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2011 and financial highlights for each of the five years in the period ended December 31, 2011. These financial statements and financial highlights are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2011 and 2010. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Kohlberg Capital Corporation and subsidiary as of December 31, 2011 and 2010, and the results of their operations, changes in their net assets and their cash flows for each of the three years in the period ended December 31, 2011 and the financial highlights for each of the five years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Kohlberg Capital Corporation and subsidiary’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 15, 2012 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

New York, New York
March 15, 2012

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders of
Kohlberg Capital Corporation

We have audited Kohlberg Capital Corporation and subsidiary’s (collectively, the “Company”) (a Delaware Corporation) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Kohlberg Capital Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying balance sheets of the Company, including the schedule of investments as of December 31, 2011 and 2010, and the related statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2010 and financial highlights for each of the five years in the period ended December 31, 2011, and our report dated March 15, 2012 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

New York, New York
March 15, 2012

KOHLBERG CAPITAL CORPORATION
  
BALANCE SHEETS

		As of December 31, 2011				As of December 31, 2010
ASSETS
Investments at fair value:
Time deposits (cost: 2011 – $229,152; 2010 – $720,225)		$	229,152			$	720,225
Money market account (cost: 2011 – $31,622,134; 2010 – $210,311)			31,622,134				210,311
Debt securities (cost: 2011 – $134,311,238; 2010 – $126,545,510)			114,673,506				91,042,928
CLO fund securities managed by non-affiliates (cost: 2011 – $12,544,303; 2010 – $15,690,983)			2,732,000				4,921,000
CLO fund securities managed by affiliate (cost: 2011 – $52,665,506; 2010 – $52,589,217)			43,680,000				48,110,000
Equity securities (cost: 2011 – $16,559,610; 2010 – $13,483,227)			6,040,895				4,688,832
Asset manager affiliates (cost: 2011 – $44,338,301; 2010 – $44,532,329)			40,814,000				41,493,000
Total Investments at fair value			239,791,687				191,186,296
Cash			2,555,259				10,175,488
Restricted cash			—				67,023,170
Interest and dividends receivable			2,548,895				2,574,115
Receivable for open trades			—				7,681,536
Accounts Receivable			859,156				851,020
Due from affiliates			3,517				—
Other assets			2,375,147				331,061
Total assets		$	248,133,661			$	279,822,686
LIABILITIES
Borrowings		$	—			$	86,746,582
Convertible Senior Notes			60,000,000				—
Accounts payable and accrued expenses			3,527,682				2,337,767
Dividend payable			4,080,037				3,812,670
Total liabilities		$	67,607,719			$	92,897,019
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share, 100,000,000 common shares authorized; 22,992,211 and 22,767,130 common shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively.		$	226,648			$	224,274
Capital in excess of par value			284,571,466				282,794,025
Accumulated undistributed net investment income			1,008,783				818,664
Accumulated net realized losses			(52,802,400	)			(34,325,792	)
Net unrealized depreciation on investments			(52,478,555	)			(62,585,504	)
Total stockholders' equity		$	180,525,942			$	186,925,667
Total liabilities and stockholders' equity		$	248,133,661			$	279,822,686
NET ASSET VALUE PER COMMON SHARE		$	7.85			$	8.21

 
 
See accompanying notes to financial statements.

KOHLBERG CAPITAL CORPORATION
  
STATEMENTS OF OPERATIONS

		For the Year Ended December 31,
		2011				2010				2009
Investment Income:
Interest from investments in debt securities		$	9,438,493			$	14,409,069			$	24,157,213
Interest from cash and time deposits			21,938				21,531				17,956
Dividends from investments in CLO fund securities managed by non-affiliates			1,984,177				1,837,024				1,296,349
Dividends from investments in CLO fund securities managed by affiliate			12,565,859				8,371,007				8,025,695
Dividends from affiliate asset manager			1,910,000				4,500,000				—
Capital structuring service fees			86,057				215,233				399,338
Other Income			2,000,000				—				—
Total investment income			28,006,524				29,353,864				33,896,551
Expenses:
Interest and amortization of debt issuance costs			4,588,482				7,088,202				9,276,563
Compensation			3,907,900				3,322,895				3,222,604
Professional fees			2,010,253				5,411,499				1,691,832
Insurance			493,305				419,942				359,062
Administrative and other			987,381				1,214,207				990,835
Total expenses			11,987,321				17,456,745				15,540,896
Net Investment Income before Income Tax Expense			16,019,203				11,897,119				18,355,655
Excise taxes			—				—				(25,000	)
Net Investment Income			16,019,203				11,897,119				18,330,655
Realized And Unrealized Gains (Losses) On Investments:
Net realized gain loss from investment transactions			(18,476,608	)			(17,862,984	)			(15,782,121	)
Net change in unrealized appreciation (depreciation) on:
Debt securities			15,864,850				9,196,912				25,300,586
Equity securities			(1,724,319	)			(1,142,038	)			(7,485,064	)
CLO fund securities managed by affiliate			(4,506,289	)			3,079,974				12,986,453
CLO fund securities managed by non-affiliates			957,680				894,877				(473,907	)
Affiliate asset manager investments			(484,973	)			(20,352,537	)			1,526,668
Net realized and unrealized appreciation (depreciation) on investments			(8,369,659	)			(26,185,796	)			16,072,615
Net Increase (Decrease) In Stockholders’ Equity Resulting From Operations		$	7,649,544			$	(14,288,677)			$	34,403,270
Net Increase (Decrease) in Stockholders' Equity Resulting from Operations per Common Share:
Basic:		$	0.33			$	(0.64	)		$	1.56
Diluted:		$	0.33			$	(0.64	)		$	1.56
Net Investment Income Per Common Share:
Basic:		$	0.70			$	0.53			$	0.83
Diluted:		$	0.70			$	0.53			$	0.83
Weighted Average Shares of Common Stock Outstanding – Basic			22,868,648				22,283,088				22,105,800
Weighted Average Shares of Common Stock Outstanding – Diluted			22,880,674				22,283,088				22,105,800

 
 
See accompanying notes to financial statements.

KOHLBERG CAPITAL CORPORATION
  
STATEMENTS OF CHANGES IN NET ASSETS

		Year Ended December 31,
		2011				2010				2009
Operations:
Net investment income		$	16,019,203			$	11,897,119			$	18,330,655
Net realized gain loss from investment transactions			(18,476,608	)			(17,862,984	)			(15,782,121	)
Net change in unrealized gain (loss) on investments			10,106,949				(8,322,812	)			31,854,736
Net increase (decrease) in net assets resulting from operations			7,649,544				(14,288,677	)			34,403,270
Shareholder distributions:
Dividends from net investment income to common stockholders			(15,802,712	)			(11,897,119	)			(18,330,654	)
Dividends from net investment income to restricted stockholders			(26,373	)			(55,404	)			(125,053	)
Common Stock Dividends in excess of net investment income			—				(3,269,688	)			(1,747,018	)
Net decrease in net assets resulting from stockholder distributions			(15,829,085	)			(15,222,211	)			(20,202,725	)
Capital share transactions:
Issuance of common stock for:
Dividend reinvestment plan			1,006,205				1,621,074				2,218,818
Vesting of restricted stock			961				647				1,223
Stock based compensation			772,650				919,111				909,119
Net increase in net assets resulting from capital share transactions			1,779,816				2,540,832				3,129,160
Net assets at beginning of period			186,925,667				213,895,723				196,566,018
Net assets at end of period (including accumulated undistributed net investment income of $1,008,783, $818,664, and $1,326,380 in 2011, 2010, and 2009, respectively.		$	180,525,942			$	186,925,667			$	213,895,723
Net asset value per common share		$	7.85			$	8.21			$	9.56
Common shares outstanding at end of period			22,992,211				22,767,130				22,363,281

 
 
See accompanying notes to financial statements.

KOHLBERG CAPITAL CORPORATION
  
STATEMENTS OF CASH FLOWS

		Year Ended December 31,
		2011				2010				2009
OPERATING ACTIVITIES:
Net increase (decrease) in stockholders’ equity resulting from operations		$	7,649,544			$	(14,288,677	)		$	34,403,270
Adjustments to reconcile net increase (decrease) in stockholders’ equity resulting from operations to net cash provided by operations:
Net realized losses on investment transactions			18,476,608				17,862,984				15,782,121
Net change in unrealized (appreciation) depreciation on investments			(10,106,949	)			8,322,812				(31,854,736	)
Net accretion of discount on securities and loans			(235,789	)			(466,826	)			(1,706,928	)
Amortization of debt issuance cost			22,908				595,614				824,695
Amortization of convertible notes offering cost			375,597				—				—
Purchases of investments			(115,976,563	)			(12,018,942	)			(13,581,354	)
Capital contribution to (from) affiliate asset manager			194,027				(3,780,817	)			(3,600,016	)
Payment-in-kind interest income			(469,329	)			(820,262	)			(3,801	)
Proceeds from sale and redemption of investments			67,194,142				204,092,344				81,459,787
Stock based compensation expense			772,650				919,112				909,121
Changes in operating assets and liabilities:
Decrease in interest and dividends receivable			25,219				1,261,916				332,567
Increase in accounts receivable			(8,135	)			—				—
(Increase) Decrease in other assets			(72,137	)			(286,473	)			251,550
(Increase) Decrease in due from affiliates			(3,517	)			44,274				346,315
Increase (decrease) in accounts payable and accrued expenses			1,189,915				(1,570,996	)			(6,661	)
Net cash provided by (used in) operating activities			(30,971,809	)			199,866,063				83,555,930
FINANCING ACTIVITIES:
Issuance of stock (net of offering costs)			—				647				1,223
Dividends paid in cash			(14,554,554	)			(14,200,702	)			(19,451,339	)
Cash paid on repayment of debt			(86,746,582	)			(131,303,781	)			(43,640,786	)
Convertible notes offering costs			(2,370,454	)			—				—
Issuance of Convertible Senior Notes			60,000,000				—				—
(Increase) Decrease in restricted cash			67,023,170				(48,327,147	)			(16,576,032	)
Net cash provided by (used in) financing activities			23,351,580				(193,830,983	)			(79,666,934	)
CHANGE IN CASH			(7,620,229	)			6,035,080				3,888,996
CASH, BEGINNING OF YEAR			10,175,488				4,140,408				251,412
CASH, END OF YEAR		$	2,555,259			$	10,175,488			$	4,140,408
Supplemental Information:
Interest paid during the year		$	2,745,968			$	7,195,181			$	8,297,586
Non-cash dividends paid during the year under the dividend reinvestment plan		$	1,007,164			$	1,621,074			$	2,218,818

 
 
See accompanying notes to financial statements.

KOHLBERG CAPITAL CORPORATION
  
SCHEDULE OF INVESTMENTS
As of December 31, 2011

Debt Securities Portfolio

Portfolio Company/Principal Business		Investment Interest Rate(1)/Maturity				Principal				Cost				Value(2)
Advanced Lighting Technologies, Inc. Home and Office Furnishings, Housewares, and Durable Consumer Products			Senior Secured Loan —  Revolving Loan .5% Cash, Due 6/13			$	—			$	—			$	—
Advanced Lighting Technologies, Inc. Home and Office Furnishings, Housewares, and Durable Consumer Products			Junior Secured Loan —  Second Lien Term Loan Note 6.3% Cash, Due 6/14				5,000,000				4,997,622				4,965,000
Alaska Communications Systems Holdings, Inc. Telecommunications			Senior Secured Loan —  Term Loan 5.5% Cash, Due 10/16				2,970,000				2,986,151				2,776,950
Avis Budget Car Rental, LLC Personal Transportation			Senior Secured Loan —  Extended Term Loan 5.8% Cash, Due 4/14				2,974,338				2,993,092				2,983,648
Bankruptcy Management Solutions, Inc. Diversified/Conglomerate Service			Junior Secured Loan —  Loan (Second Lien) 1.4% Cash, 7.0% PIK, Due 8/15				1,291,447				1,217,438				39,822
Bankruptcy Management Solutions, Inc. Diversified/Conglomerate Service			Senior Secured Loan —  Term Loan B 6.5% Cash, 1.0% PIK, Due 8/14				1,442,478				1,434,611				331,777
Bicent Power LLC Utilities			Junior Secured Loan —  Advance (Second Lien) 4.6% Cash, Due 12/14				4,000,000				4,000,000				137,500
Burger King Corporation Personal, Food and Miscellaneous Services			Senior Secured Loan —  Tranche B Term Loan 4.5% Cash, Due 10/16				2,872,500				2,872,500				2,827,359
Caribe Media Inc. (fka Caribe Information Investments Incorporated) Printing and Publishing			Senior Secured Loan —  Loan 10.0% Cash, Due 11/14				684,774				684,774				684,774
CoActive Technologies LLC (fka CoActive Technologies, Inc.) Machinery (Non-Agriculture, Non-Construction, Non-Electronic)			Junior Secured Loan —  Term Loan (Second Lien) 7.3% Cash, Due 1/15				2,000,000				1,983,174				1,552,200
Del Monte Foods Company Beverage, Food and Tobacco			Senior Secured Loan —  Initial Term Loan 4.5% Cash, Due 3/18				2,985,000				2,991,687				2,843,212
eInstruction Corporation Healthcare, Education and Childcare			Junior Secured Loan —  Term Loan (Second Lien) 11.5% Cash, Due 7/14				10,000,000				10,000,000				9,489,000
Freescale Semiconductor, Inc. Electronics			Senior Subordinated Bond —  10.125% – 12/2016 –  35687MAP2 10.3% Cash, Due 12/16				3,000,000				3,007,007				3,135,000
Ginn LA Conduit Lender, Inc.(8) Buildings and Real Estate(4)			Senior Secured Loan —  First Lien Tranche A Credit-Linked Deposit 7.8% Cash, Due 6/11				1,257,143				1,224,101				91,142
Ginn LA Conduit Lender, Inc.(8) Buildings and Real Estate(4)			Senior Secured Loan —  First Lien Tranche B Term Loan 7.8% Cash, Due 6/11				2,694,857				2,624,028				195,377
Ginn LA Conduit Lender, Inc.(8) Buildings and Real Estate(4)			Junior Secured Loan —  Loan (Second Lien) 11.8% Cash, Due 6/12				3,000,000				2,715,997				15,000

Portfolio Company/Principal Business		Investment Interest Rate(1)/Maturity				Principal				Cost				Value(2)
Twin-Star International, Inc. Home and Office Furnishings, Housewares, and Durable Consumer Products			Senior Subordinated Bond —  Senior Subordinated Note 13.0% Cash, Due 4/14			$	5,500,000			$	5,500,000			$	5,500,000
Univar Inc. Chemicals, Plastics and Rubber			Senior Secured Loan —  Term B Loan 5.0% Cash, Due 6/17				2,984,925				2,984,925				2,886,049
Vantiv, LLC (fka Fifth Third Processing Solutions, LLC) Electronics			Senior Secured Loan —  Term B-1 Loan (First Lien) 4.5% Cash, Due 11/16				1,989,975				1,992,299				1,988,482
Vertafore, Inc. Electronics			Senior Secured Loan —  Term Loan (First Lien) 5.3% Cash, Due 7/16				1,989,956				1,933,723				1,952,147
Walker Group Holdings LLC Cargo Transport			Junior Secured Loan —  Term Loan B 13.3% Cash, Due 12/13				416,737				416,737				416,737
Walker Group Holdings LLC Cargo Transport			Junior Secured Loan —  Term Loan B 13.3% Cash, Due 12/13				3,957,614				3,957,614				3,957,614
Warner Chilcott Company, LLC Healthcare, Education and Childcare			Senior Secured Loan —  Term B-2 Loan 4.3% Cash, Due 3/18				454,851				455,921				449,450
Warner Chilcott Corporation Healthcare, Education and Childcare			Senior Secured Loan —  Term B-1 Loan 4.3% Cash, Due 3/18				909,703				911,841				898,900
WC Luxco S.A.R.L. (Warner Chilcott)(3) Healthcare, Education and Childcare			Senior Secured Loan —  Term B-3 Loan 4.3% Cash, Due 3/18				625,421				626,891				617,994
Wesco Aircraft Hardware Corp. Aerospace and Defense			Senior Secured Loan —  Tranche B Term Loan 4.3% Cash, Due 4/17				2,590,244				2,584,560				2,599,154
Total Investment in Debt Securities (64% of net asset value at fair value)						$	136,034,039			$	134,311,238			$	114,673,506

Equity Portfolio

Portfolio Company/Principal Business		Investment				Percentage Interest/Shares				Cost				Value(2)
Aerostructures Holdings L.P.(6) Aerospace and Defense			Partnership Interests				1.2	%		$	1,000,000			$	1,000
Aerostructures Holdings L.P.(6) Aerospace and Defense			Series A Preferred Interests				1.2	%			250,961				250,961
Bankruptcy Management Solutions, Inc.(6) Diversified/Conglomerate Service			Common Stock				1.2	%			218,592				1,005
Bankruptcy Management Solutions, Inc.(6) Diversified/Conglomerate Service			Warrants				0.1	%			—				—
Coastal Concrete Holding II, LLC(6) Buildings and Real Estate(4)			Class A Units				10.8	%			8,625,626				1,000
eInstruction Acquisition, LLC(6) Healthcare, Education and Childcare			Membership Units				1.1	%			1,079,617				442,319
FP WRCA Coinvestment Fund VII, Ltd.(3),(6) Machinery (Non-Agriculture, Non-Construction, Non-Electronic)			Class A Shares				1,500			$	1,500,000				2,339,700
International Architectural Products, Inc.(6) Mining, Steel, Iron and Non-Precious Metals			Common				2.5	%			292,851				1,000
Legacy Cabinets, Inc.(6) Home and Office Furnishings, Housewares, and Durable Consumer Products			Equity				4.0	%			115,580				1,000

Portfolio Company/Principal Business		Investment				Percentage Interest/Shares				Cost				Value(2)
Perseus Holding Corp.(6) Leisure, Amusement, Motion Pictures, Entertainment			Common				0.2	%		$	400,000			$	193,120
Plumbing Holdings Corporation(6) Home and Office Furnishings, Housewares, and Durable Consumer Products			Common				7.8	%			—				—
Plumbing Holdings Corporation(6) Home and Office Furnishings, Housewares, and Durable Consumer Products			Preferred Stock				9.0	%			2,716,618				2,270,821
Caribe Media Inc. (fka Caribe Information Investments Incorporated)(6)			Common				1.3	%			359,765				538,969
Total Investment in Equity Securities (3% of net asset value at fair value)										$	16,559,610			$	6,040,895

CLO Fund Securities

CLO Equity Investments

Portfolio Company		Investment				Percentage Interest				Cost				Value(2)
Grant Grove CLO, Ltd.(3),(10)			Subordinated Securities				22.2	%		$	4,724,303			$	2,730,000
Katonah III, Ltd.(3),(10)			Preferred Shares				23.1	%			4,500,000				1,000
Katonah V, Ltd.(3),(10),(11)			Preferred Shares				26.7	%			3,320,000				1,000
Katonah VII CLO Ltd.(3),(7),(10)			Subordinated Securities				16.4	%			4,500,000				2,210,000
Katonah VIII CLO Ltd(3),(7),(10)			Subordinated Securities				10.3	%			3,400,000				1,800,000
Katonah IX CLO Ltd(3),(7),(10)			Preferred Shares				6.9	%			2,000,000				1,240,000
Katonah X CLO Ltd(3),(7),(10)			Subordinated Securities				33.3	%			11,631,226				8,320,000
Katonah 2007-I CLO Ltd.(3),(7),(10)			Preferred Shares				100.0	%			30,027,384				23,540,000
Total Investment in CLO Equity Securities										$	64,102,913			$	39,842,000

CLO Rated-Note Investment

Portfolio Company		Investment				Percentage Interest				Cost				Value(2)
Katonah 2007-I CLO Ltd.(3),(7),(10)			Class B-2L Notes Par Value of $10,500,000 100.0%, Due 4/22				100.0	%		$	1,106,896			$	6,570,000
Total Investment in CLO Rated-Note										$	1,106,896			$	6,570,000
Total Investment in CLO Fund Securities (26% of net asset value at fair value)										$	65,209,809			$	46,412,000

Asset Manager Affiliate

Portfolio Company/Principal Business		Investment				Percentage Interest				Cost				Value(2)
Katonah Debt Advisors			Asset Management Company				100.0	%		$	44,338,301			$	40,814,000
Total Investment in Asset Manager Affiliate (23% of net asset value at fair value)										$	44,338,301			$	40,814,000

Time Deposits and Money Market Account

Time Deposits and Money Market Account		Investment				Yield				Par/Cost				Value(2)
JP Morgan Asset Account			Time Deposit				0.0	%		$	229,152			$	229,152
JP Morgan Business Money Market Account(9)			Money Market Account				0.2	%			164,573				164,573
US Bank Money Market Account			Money Market Account				0.4	%			31,457,561				31,457,561
Total Investment in Time Deposit and Money Market Accounts (18% of net asset value at fair value)										$	31,851,286			$	31,851,286
Total Investments(5) (133% of net asset value at fair value)										$	292,270,244			$	239,791,687

KOHLBERG CAPITAL CORPORATION
  
SCHEDULE OF INVESTMENTS
As of December 31, 2010

Debt Securities Portfolio

Portfolio Company/Principal Business		Investment Interest Rate(1)/Maturity				Principal				Cost				Value(2)
Advanced Lighting Technologies, Inc. Home and Office Furnishings, Housewares, and Durable Consumer Products			Senior Secured Loan —  Revolving Loan 3.7% Cash, Due 6/13			$	1,080,000			$	1,075,943			$	979,452
Advanced Lighting Technologies, Inc.(6) Home and Office Furnishings, Housewares, and Durable Consumer Products			Junior Secured Loan —  Second Lien Term Loan Note 6.3% Cash, Due 6/14				5,000,000				5,000,000				5,000,000
Awesome Acquisition Company (CiCi's Pizza)(6) Personal, Food and Miscellaneous Services			Junior Secured Loan —  Term Loan (Second Lien) 5.3% Cash, Due 6/14				4,000,000				3,985,854				3,840,000
Bankruptcy Management Solutions, Inc.(6) Diversified/Conglomerate Service			Junior Secured Loan —  Second Lien Facility 1.3% Cash, 7.0% PIK, Due 8/15				1,217,438				1,217,438				95,368
Bankruptcy Management Solutions, Inc.(6) Diversified/Conglomerate Service			Senior Secured Loan —  Term Loan B 7.5% Cash, Due 8/14				1,438,720				1,448,006				719,360
Bicent Power LLC(6) Utilities			Junior Secured Loan —  Advance (Second Lien) 4.3% Cash, Due 12/14				4,000,000				4,000,000				2,367,600
BP Metals, LLC (fka Constellation Enterprises)(6) Mining, Steel, Iron and Non-Precious Metals			Senior Secured Loan —  Term Loan 12.0% Cash, Due 6/13				3,982,143				3,982,143				4,002,054
Caribe Information Investments Incorporated(6) Printing and Publishing			Senior Secured Loan —  Term Loan 2.5% Cash, Due 3/13				1,611,045				1,608,021				1,273,692
Charlie Acquisition Corp.(9) Personal, Food and Miscellaneous Services			Mezzanine Investment —  Senior Subordinated Notes 17.5% Cash, Due 6/13				14,261,996				10,744,496				250,000
CoActive Technologies LLC (fka CoActive Technologies, Inc.)(6) Machinery (Non-Agriculture, Non-Construction, Non-Electronic)			Junior Secured Loan —  Term Loan (Second Lien) 7.1% Cash, Due 1/15				2,000,000				1,977,696				1,464,600
eInstruction Corporation(6) Healthcare, Education and Childcare			Junior Secured Loan —  Term Loan (Second Lien) 7.8% Cash, Due 7/14				10,000,000				10,000,000				10,000,000
Freescale Semiconductor, Inc. Electronics			Senior Subordinated Bond —  10.125% – 12/2016 –  35687MAP2 10.1% Cash, Due 12/16				3,000,000				3,006,137				3,176,250
Ginn LA Conduit Lender, Inc.(9) Buildings and Real Estate(4)			Senior Secured Loan —  First Lien Tranche A Credit-Linked Deposit 7.8% Cash, Due 6/11				1,257,143				1,224,101				72,286
Ginn LA Conduit Lender, Inc.(9) Buildings and Real Estate(4)			Senior Secured Loan —  First Lien Tranche B Term Loan 7.8% Cash, Due 6/11				2,694,857				2,624,028				154,954
Ginn LA Conduit Lender, Inc.(9) Buildings and Real Estate(4)			Junior Secured Loan —  Loan (Second Lien) 11.8% Cash, Due 6/12				3,000,000				2,715,997				15,000
HMSC Corporation (aka Swett and Crawford)(6) Insurance			Junior Secured Loan —  Loan (Second Lien) 5.8% Cash, Due 10/14				5,000,000				4,890,322				4,049,000

Portfolio Company/Principal Business		Investment Interest Rate(1)/Maturity				Principal				Cost				Value(2)
Wesco Aircraft Hardware Corp. Aerospace and Defense			Junior Secured Loan —  Loan (Second Lien) 6.0% Cash, Due 3/14			$	1,720,000			$	1,679,298			$	1,720,000
Wesco Aircraft Hardware Corp.(6) Aerospace and Defense			Junior Secured Loan —  Loan (Second Lien) 6.0% Cash, Due 3/14				3,554,283				3,569,258				3,554,283
Total Investment in Debt Securities (49% of net asset value at fair value)						$	130,939,851			$	126,545,510			$	91,042,928

Equity Portfolio

Portfolio Company/Principal Business		Investment				Percentage Interest/Shares				Cost				Value(2)
Aerostructures Holdings L.P.(7) Aerospace and Defense			Partnership Interests				1.2	%		$	1,000,000			$	88,600
Aerostructures Holdings L.P.(7) Aerospace and Defense			Series A Preferred Interests				1.2	%			250,961				250,961
Bankruptcy Management Solutions, Inc.(6),(7) Diversified/Conglomerate Service			Warrants				0.1	%			—				—
Coastal Concrete Holding II, LLC(7) Buildings and Real Estate(4)			Class A Units				10.8	%			8,625,626				250,143
eInstruction Acquisition, LLC(7) Healthcare, Education and Childcare			Membership Units				1.1	%			1,079,617				1,079,724
FP WRCA Coinvestment Fund VII, Ltd.(3),(7) Machinery (Non-Agriculture, Non-Construction, Non-Electronic)			Class A Shares				1,500				1,500,000				2,400,000
International Architectural Products, Inc.(6),(7) Mining, Steel, Iron and Non-Precious Metals			Common				2.5	%			292,851				227,223
Legacy Cabinets, Inc.(6),(7) Home and Office Furnishings, Housewares, and Durable Consumer Products			Equity				4.0	%			115,580				49,422
Perseus Holding Corp.(7) Leisure, Amusement, Motion Pictures, Entertainment			Common				0.2	%			400,000				312,200
Bankruptcy Management Solutions, Inc.(6),(7) Diversified/Conglomerate Service			Common Stock				1.2	%			218,592				30,559
Total Investment in Equity Securities (3% of net asset value at fair value)										$	13,483,227			$	4,688,832

CLO Fund Securities

CLO Equity Investments

Portfolio Company		Investment				Percentage Interest				Cost				Value(2)
Grant Grove CLO, Ltd.(3),(12)			Subordinated Securities				22.2	%		$	4,720,982			$	3,150,000
Katonah III, Ltd.(3),(12)			Preferred Shares				23.1	%			4,500,000				470,000
Katonah IV, Ltd.(3),(12)			Preferred Shares				17.1	%			3,150,000				1,300,000
Katonah V, Ltd.(3),(12),(13)			Preferred Shares				26.7	%			3,320,000				1,000
Katonah VII CLO Ltd.(3),(8),(12)			Subordinated Securities				16.4	%			4,500,000				2,090,000
Katonah VIII CLO Ltd(3),(8),(12)			Subordinated Securities				10.3	%			3,400,000				1,690,000
Katonah IX CLO Ltd(3),(8),(12)			Preferred Shares				6.9	%			2,000,000				1,300,000
Katonah X CLO Ltd (3),(8),(12)			Subordinated Securities				33.3	%			11,612,677				8,820,000
Katonah 2007-I CLO Ltd.(3),(8),(12)			Preferred Shares				100.0	%			29,987,959				26,200,000
Total Investment in CLO Equity Securities										$	67,191,618			$	45,021,000

CLO Rated-Note Investment

Portfolio Company		Investment				Percentage Interest				Cost				Value(2)
Katonah 2007-I CLO Ltd.(3),(8),(12)			Class B-2L Notes Par Value of $44,674 5.2%, Due 1/00				100.0	%		$	1,088,582			$	8,010,000
Total Investment in CLO Rated-Note										$	1,088,582			$	8,010,000
Total Investment in CLO Fund Securities (28% of net asset value at fair value)										$	68,280,200			$	53,031,000

Asset Manager Affiliate

Portfolio Company / Principal Business		Investment				Percentage Interest				Cost				Value(2)
Katonah Debt Advisors			Asset Management Company				100.0	%		$	44,532,329			$	41,493,000
Total Investment in Asset Manager Affiliate (22% of net asset value at fair value)										$	44,532,329			$	41,493,000

Time Deposits and Money Market Account

Time Deposits and Money Market Account		Investment				Yield				Par / Cost				Value(2)
JP Morgan Asset Account			Time Deposit				0.03	%		$	720,225			$	720,225
JP Morgan Business Money Market Account(11)			Money Market Account				0.2	%			210,311				210,311
Total Investment in Time Deposit and Money Market Accounts (0% of net asset value at fair value)										$	930,536			$	930,536
Total Investments(5) (102% of net asset value at fair value)										$	253,771,802			$	191,186,296

KOHLBERG CAPITAL CORPORATION
  
FINANCIAL HIGHLIGHTS
($ per share)

		For the Year Ended December 31,
		2011				2010				2009				2008				2007
Per Share Data:
Net asset value, at beginning of year		$	8.21			$	9.56			$	9.03			$	14.38			$	14.29
Net investment income(1)			0.70				0.53				0.83				1.50				1.27
Net realized losses(1)			(0.81	)			(0.79	)			(0.71	)			(0.03	)			0.01
Net change in unrealized appreciation/depreciation on investments(1)			0.37				(0.54	)			1.19				(6.80	)			0.12
Net income			0.26				(0.80	)			1.31				(5.33	)			1.40
Net decrease in net assets resulting from distributions
From net investment income			(0.69	)			(0.52	)			(0.84	)			(1.43	)			(1.36	)
In excess of net investment income			—				(0.14	)			(0.08	)			(0.01	)			(0.04	)
Net decrease in net assets resulting from distributions			(0.69	)			(0.66	)			(0.92	)			(1.44	)			(1.40	)
Net increase in net assets relating to stock-based transactions
Issuance of common stock (not including DRIP)			—				—				—				1.26				—
Issuance of common stock under dividend reinvestment plan			0.04				0.07				0.10				0.12				0.06
Stock based compensation expense			0.03				0.04				0.04				0.04				0.03
Net increase in net assets relating to stock-based transactions			0.07				0.11				0.14				1.42				0.09
Net asset value, end of year		$	7.85			$	8.21			$	9.56			$	9.03			$	14.38
Total net asset value return(2)			4.0	%			(7.1	)%			16.0	%			(27.2	)%			10.4	%
Ratio/Supplemental Data:
Per share market value at beginning of year		$	6.97			$	4.56			$	3.64			$	12.00			$	17.30
Per share market value at end of year		$	6.31			$	6.97			$	4.56			$	3.64			$	12.00
Total market return(3)			0.4	%			67.6	%			50.5	%			(57.7	)%			(22.5	)%
Shares outstanding at end of year			22,992,211				22,767,130				22,363,281				21,771,186				18,017,699
Net assets at end of year		$	180,525,942			$	186,925,667			$	213,895,724			$	196,566,018			$	259,068,164
Portfolio turnover rate			24.5	%			3.4	%			3.2	%			14.4	%			24.7	%
Average debt outstanding		$	53,974,098			$	154,952,070			$	236,184,703			$	248,300,441			$	105,616,438
Average debt outstanding per share		$	2.35			$	6.81			$	10.56			$	11.41			$	5.86
Asset coverage ratio			401	%			315	%			198	%			175	%			202	%
Ratio of net investment income to average net assets			8.1	%			5.8	%			8.7	%			12.0	%			8.6	%
Ratio of total expenses to average net assets			6.0	%			8.5	%			7.4	%			7.2	%			5.9	%
Ratio of interest expense to average net assets			2.3	%			3.4	%			4.4	%			4.3	%			2.7	%
Ratio of non-interest expenses to average net assets			3.7	%			5.0	%			3.0	%			3.0	%			3.2	%

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Kohlberg Capital Corporation (“Kohlberg Capital” or the “Company”) is an internally managed, non-diversified closed-end investment company that is regulated as a business development company (“BDC”) under the Investment Company Act of 1940. The Company originates, structures, and invests in senior secured term loans, mezzanine debt and selected equity securities primarily in privately-held middle market companies. The Company defines the middle market as comprising companies with earnings before interest, taxes, depreciation and amortization (“EBITDA”), of $10 million to $50 million and/or total debt of $25 million to $150 million. The Company was formed as a Delaware limited liability company on August 8, 2006 and, prior to the issuance of shares of the Company’s common stock in its initial public offering (“IPO”), converted to a corporation incorporated in Delaware on December 11, 2006. Prior to its IPO, the Company did not have material operations. The Company’s IPO of 14,462,000 shares of common stock raised net proceeds of approximately $200 million. Prior to the IPO, the Company issued 3,484,333 shares to affiliates of Kohlberg & Co., L.L.C. (“Kohlberg & Co.”), a leading middle market private equity firm, in exchange for the contribution to the Company of their ownership interests in Katonah Debt Advisors, L.L.C., and related affiliates controlled by the Company (collectively, “Katonah Debt Advisors”) and in securities issued by collateralized loan obligation funds (“CLO Funds”) managed by Katonah Debt Advisors and two other asset managers. As of December 31, 2011, Katonah Debt Advisors had approximately $1.9 billion of assets under management.

The Company’s investment objective is to generate current income and capital appreciation from investments made in senior secured term loans, mezzanine debt and selected equity investments in privately-held middle market companies. The Company also expects to continue to receive distributions of recurring fee income and to generate capital appreciation from its investment in the asset management business of Katonah Debt Advisors. Katonah Debt Advisors manages CLO Funds which invest in broadly syndicated loans, high-yield bonds and other credit instruments. The Company’s investment portfolio as well as the investment portfolios of the CLO Funds in which it has invested and the investment portfolios of the CLO Funds managed by Katonah Debt Advisors consist exclusively of credit instruments and other securities issued by corporations and do not include any asset-backed securities secured by commercial mortgages, residential mortgages or other consumer borrowings.

The Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. As a RIC, the Company generally will not have to pay corporate-level taxes on any income that it distributes in a timely manner to its stockholders.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. Furthermore, the preparation of the financial statements requires management to make significant estimates and assumptions including the fair value of investments that do not have a readily available market value. Actual results could differ from those estimates, and the differences could be material. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for the full year.

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company does not consolidate portfolio company investments, including those in which it has a controlling interest (Katonah Debt Advisors, including related affiliates, is currently the only company in which the Company has a controlling interest). Effective January 1, 2010, Katonah Debt Advisors adopted guidance encompassed in Accounting Standards Codification Topic 810, “Consolidation.” Although the Company cannot consolidate portfolio company investments, the adoption of this new guidance had an impact on the required disclosures relating to Katonah Debt Advisors, as it requires Katonah Debt Advisors to consolidate its managed CLO Funds that were not previously consolidated. As a result of the consolidation of these CLO Funds into Katonah Debt Advisors, Katonah Debt Advisors qualifies as a “significant subsidiary” and, as a result, the Company is required to include additional disclosure regarding Katonah Debt Advisors in its filings. The additional disclosures regarding Katonah Debt Advisors do not directly impact the financial operations or results of the Company.

Accounting Standards Codification.  In June 2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement establishing the FASB Accounting Standards Codification (“ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP. The ASC reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setters into a single source of authoritative accounting principles arranged by topic. The standard explicitly recognizes rules and interpretive releases of the Commission under federal securities laws as authoritative GAAP for SEC registrants. The ASC supersedes all existing U.S. accounting standards; all other accounting literature not included in the ASC (other than SEC guidance for publicly-traded companies) is considered non-authoritative. The ASC was effective on a prospective basis for interim and annual reporting periods ending after September 15, 2009. The adoption of the ASC changed the Company’s references to U.S. GAAP accounting standards but did not impact its results of operations, financial position or liquidity.

Investments

Investment transactions are recorded on the applicable trade date. Realized gains or losses are determined using the specific identification method.

Valuation of Portfolio Investments.  The Company’s Board of Directors is ultimately and solely responsible for making a good faith determination of the fair value of portfolio investments on a quarterly basis. Debt and equity securities for which market quotations are readily available are generally valued at such market quotations. Debt and equity securities that are not publicly traded or whose market price is not readily available are valued by the Board of Directors based on detailed analyses prepared by management, the Valuation Committee of the Board of Directors, and, in certain circumstances, third parties with valuation expertise. Valuations are conducted by management on 100% of the investment portfolio at the end of each quarter. The Company follows the provisions of ASC Fair Value Measurements and Disclosures (“Fair Value Measurements and Disclosures”). This standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about assets and liabilities measured at fair value. Fair Value Measurements and Disclosures defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Subsequent to the adoption of Fair Value Measurements and Disclosures, the FASB has issued various staff positions clarifying the initial standard as noted below.

In January 2010, the FASB issued guidance that clarifies and requires new disclosures about fair value measurements. The clarifications and requirement to disclose the amounts and reasons for significant transfers between Level 1 and Level 2, as well as significant transfers in and out of Level 3 of the fair value hierarchy, were adopted by the Company in the first quarter of 2010. Note 4 below reflects the amended disclosure requirements. The new guidance also requires that purchases, sales, issuances and settlements be presented

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

gross in the Level III reconciliation and that requirement is effective for fiscal years beginning after December 15, 2010 and for interim periods within those years. The Company is evaluating the increased disclosure requirements for implementation by the effective date. Since this new guidance only amends the disclosures requirements, it did not impact our statements of financial position, statements of operations, or cash flow statements.

Fair Value Measurements and Disclosures requires the disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques and related inputs, if any, during the period.

In 2011 and 2010, the Company engaged an independent valuation firm, to provide a third-party review of our CLO fair value model relative to its functionality, model inputs and calculations as a reasonable method to determine CLO fair values, in the absence of Level 1 or Level 2 trading activity or observable market inputs. The independent valuation firm concluded that the Company’s CLO model appropriately factors in all the necessary inputs required to build a CLO equity cash flow for fair value purposes and that the inputs were being employed correctly.

Beginning with the period ending June 30, 2011, the Company has engaged an independent valuation firm to provide third party valuation consulting services to the Company’s Board of Directors. Each quarter, the independent valuation firm will perform third party valuations on the Company’s investments on illiquid securities such that they are reviewed at least once during a trailing 12 month period. Third party valuations were performed on approximately 8% of investments at fair value as of December 31, 2011. These third party valuation estimates were considered as one of the relevant data inputs in the Company’s determination of fair value. The Board of Directors intends to continue to engage an independent valuation firm in the future to provide certain valuation services, including the review of certain portfolio assets, as part of the quarterly and annual year-end valuation process.

The Board of Directors may consider other methods of valuation than those set forth above to determine the fair value of Level III investments as appropriate in conformity with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ materially from the values that would have been used had a ready market existed for such investments. Further, such investments may be generally subject to legal and other restrictions on resale or otherwise be less liquid than publicly traded securities. In addition, changes in the market environment and other events may occur over the life of the investments that may cause the value realized on such investments to be different from the currently assigned valuations.

The Company’s valuation methodology and procedures are as follows:

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

The majority of the Company’s investment portfolio is composed of debt and equity securities with unique contract terms and conditions and/or complexity that requires a valuation of each individual investment that considers multiple levels of market and asset specific inputs, including historical and forecasted financial and operational performance of the individual investment, projected cash flows, market multiples, comparable market transactions, the priority of the security compared with those of other securities for such issuers, credit risk, interest rates, and independent valuations and reviews.

Loans and Debt Securities.  To the extent that the Company’s investments are exchange traded and are priced or have sufficient price indications from normal course trading at or around the valuation date (financial reporting date), such pricing will determine fair value. Pricing service marks from third party pricing services may be used as an indication of fair value, depending on the volume and reliability of the marks, sufficient and reasonable correlation of bid and ask quotes, and, most importantly, the level of actual trading activity. However, most of the Company’s investments are illiquid investments with little or no trading activity. Further, the Company has been unable to identify directly comparable market indices or other market guidance that correlate directly to the types of investments the Company owns. As a result, for most of its assets, the Company determines fair value using alternative methodologies using available market data, as adjusted, to reflect the types of assets the Company owns, their structure, qualitative and credit attributes and other asset specific characteristics.

The Company derives fair value for its illiquid investments that do not have indicative fair values based upon active trades primarily by using a present value technique that discounts the estimated contractual cash flows for the underlying assets with discount rates imputed by broad market indices, bond spreads and yields for comparable issuers relative to the subject assets (the “Market Yield Approach”) and also considers recent loan amendments or other activity specific to the subject asset. Discount rates applied to estimated contractual cash flows for an underlying asset vary by specific investment, industry, priority and nature of the debt security (such as the seniority or security interest of the debt security) and are assessed relative to two indices, a leveraged loan index and a high-yield bond index, at the valuation date. The Company has identified these two indices as benchmarks for broad market information related to its loan and debt investments. Because the Company has not identified any market index that directly correlates to the loan and debt investments held by the Company and therefore uses the two benchmark indices, these market indices may require significant adjustment to better correlate such market data for the calculation of fair value of the investment under the Market Yield Approach. Such adjustments require judgment and may be material to the calculation of fair value. Further adjustments to the discount rate may be applied to reflect other market conditions or the perceived credit risk of the borrower. When broad market indices are used as part of the valuation methodology, their use is subject to adjustment for many factors, including priority, collateral used as security, structure,

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

performance and other quantitative and qualitative attributes of the asset being valued. The resulting present value determination is then weighted along with any quotes from observable transactions and broker/pricing quotes. If such quotes are indicative of actual transactions with reasonable trading volume at or near the valuation date that are not liquidation or distressed sales, relatively more reliance will be put on such quotes to determine fair value. If such quotes are not indicative of market transactions or are insufficient as to volume, reliability, consistency or other relevant factors, such quotes will be compared with other fair value indications and given relatively less weight based on their relevancy. Other significant assumptions, such as coupon and maturity, are asset-specific and are noted for each investment in the Schedules of Investments.

Equity and Equity-Related Securities.  The Company’s equity and equity-related securities in portfolio companies for which there is no liquid public market are carried at fair value based on the enterprise value of the portfolio company, which is determined using various factors, including EBITDA and cash flows from operations less capital expenditures and other pertinent factors, such as recent offers to purchase a portfolio company’s securities or other liquidation events. The determined fair values are generally discounted to account for restrictions on resale and minority ownership positions. The values of the Company’s equity and equity-related securities in public companies for which market quotations are readily available are based upon the closing public market prices on the balance sheet date. Securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.

The significant inputs used to determine the fair value of equity and equity-related securities include prices, earnings, EBITDA and cash flows after capital expenditures for similar peer comparables and the investment entity itself. Equity and equity related securities are classified as Level III, as described in Note 4 below, when there is limited activity or less transparency around inputs to the valuation given the lack of information related to such equity investments held in nonpublic companies. Significant assumptions observed for comparable companies are applied to relevant financial data for the specific investment. Such assumptions, such as model discount rates or price/earnings multiples, vary by the specific investment, equity position and industry and incorporate adjustments for risk premiums, liquidity and company specific attributes. Such adjustments require judgment and may be material to the calculation of fair value.

Affiliate Asset Manager.  The Company’s investment in its wholly-owned asset management company, Katonah Debt Advisors, is carried at fair value, which is determined after taking into consideration a percentage of assets under management and a discounted cash flow model incorporating different levels of discount rates depending on the hierarchy of fees earned (including the likelihood of realization of senior, subordinate and incentive fees) and prospective modeled performance. Such valuation includes an analysis of comparable asset management companies. Katonah Debt Advisors is classified as a Level III investment (as described below). Any change in value from period to period is recognized as net change in unrealized appreciation or depreciation.

CLO Fund Securities.  The Company typically makes a minority investment in the most junior class of securities of CLO Funds raised and managed by Katonah Debt Advisors and may selectively invest in securities issued by funds managed by other asset management companies (collectively “CLO Fund securities”). The Company’s CLO Fund securities relate exclusively to credit instruments issued by corporations and do not include any asset-backed securities secured by commercial mortgages, residential mortgages, or consumer borrowings.

The Company’s investments in CLO Fund securities are carried at fair value, which is based either on (i) the present value of the net expected cash inflows for interest income and principal repayments from underlying assets and cash outflows for interest expense, debt paydown and other fund costs for the CLO Funds that are approaching or past the end of their reinvestment period and therefore are selling assets and/or using principal repayments to pay down CLO Fund debt (or will begin to do so shortly), and for which there continue to be net cash distributions to the class of securities owned by the Company, or (ii) a discounted cash flow model for more recent CLO Funds that utilizes prepayment and loss assumptions based on historical

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

experience and projected performance, economic factors, the characteristics of the underlying cash flow and comparable yields for similar securities or preferred shares to those in which the Company has invested. The Company recognizes unrealized appreciation or depreciation on the Company’s investments in CLO Fund securities as comparable yields in the market change and/or based on changes in NAVs or estimated cash flows resulting from changes in prepayment or loss assumptions in the underlying collateral pool. As each investment in CLO Fund securities ages, the expected amount of losses and the expected timing of recognition of such losses in the underlying collateral pool are updated and the revised cash flows are used in determining the fair value of the CLO Fund investment. The Company determines the fair value of its investments in CLO Fund securities on an individual security-by-security basis.

Due to the individual attributes of each CLO Fund security, they are classified as a Level III investment unless specific trading activity can be identified at or near the valuation date. When available, observable market information will be identified, evaluated and weighted accordingly in the application of such data to the present value models and fair value determination. Significant assumptions to the present value calculations include default rates, recovery rates, prepayment rates, investment/reinvestment rates and spreads and the discount rate by which to value the resulting underlying cash flows. Such assumptions can vary significantly, depending on market data sources which often vary in depth and level of analysis, understanding of the CLO market, detailed or broad characterization of the CLO market and the application of such data to an appropriate framework for analysis. The application of data points are based on the specific attributes of each individual CLO Fund security’s underlying assets, historic, current and prospective performance, vintage, and other quantitative and qualitative factors that would be evaluated by market participants. The Company evaluates the source of market data for reliability as an indicative market input, consistency amongst other inputs and results and also the context in which such data is presented.

For bond rated tranches of CLO Fund securities (those above the junior class) without transactions to support a fair value for the specific CLO Fund and tranche, fair value is based on discounting estimated bond payments at current market yields, which may reflect the adjusted yield on the leveraged loan index for similarly rated tranches, as well as prices for similar tranches for other CLO Funds and also other factors such as the default and recovery rates of underlying assets in the CLO Fund, as may be applicable. Such model assumptions may vary and incorporate adjustments for risk premiums and CLO Fund specific attributes. Such adjustments require judgment and may be material to the calculation of fair value.

Cash.  The Company defines cash as demand deposits. The Company places its cash with financial institutions and, at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.

Restricted Cash.  Restricted cash at December 31, 2010 consisted mostly of cash held in an operating account pursuant to the Company’s secured credit facility agreement with its lender. As the Company paid off its secured credit facility as of January 31, 2011, no such restricted cash balances were needed.

Time Deposits and Money Market Accounts.  Time deposits primarily represent investments of cash held in non-demand deposit accounts. Money market accounts primarily represent short term interest-bearing deposit accounts including an account that contains restricted cash held for employee flexible spending accounts.

Interest Income.  Interest income, including the amortization of premium and accretion of discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. The Company generally places a loan or security on non-accrual status and ceases recognizing cash interest income on such loan or security when a loan or security becomes 90 days or more past due or if the Company otherwise does not expect the debtor to be able to service its debt obligations. Non-accrual loans remain in such status until

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

the borrower has demonstrated the ability and intent to pay contractual amounts due or such loans become current. As of December 31, 2011, three issuers representing less than 1% of total investments at fair value were considered in default.

Dividends from Affiliate Asset Manager.  The Company records dividend income from its affiliate asset manager on the declaration date, which represents the ex-dividend date.

Dividend Income from CLO Fund Securities.  The Company generates dividend income from its investments in the most junior class of securities of CLO Funds (typically preferred shares or subordinated securities) managed by Katonah Debt Advisors and selective investments in securities issued by funds managed by other asset management companies. The Company’s CLO Fund junior class securities are subordinated to senior bond holders who typically receive a fixed rate of return on their investment. The CLO Funds are leveraged funds and any excess cash flow or “excess spread” (interest earned by the underlying securities in the fund less payments made to senior bond holders and less fund expenses and management fees) is paid to the holders of the CLO Fund’s subordinated securities or preferred shares. The Company makes estimated interim accruals of such dividend income based on recent historical distributions and CLO Fund performance and adjusts such accruals on a quarterly basis to reflect actual distributions.

For non-junior class CLO Fund securities, such as the Company’s investment in the Class B-2L Notes of the Katonah 2007-1 CLO, interest is earned at a fixed spread relative to the LIBOR index.

Capital Structuring Service Fees.  The Company may earn ancillary structuring and other fees related to the origination, investment, disposition or liquidation of debt and investment securities. Generally, the Company will capitalize loan origination fees, then amortize these fees into interest income over the term of the loan using the effective interest rate method, recognizes prepayment and liquidation fees upon receipt and equity structuring fees as earned, which generally occurs when an investment transaction closes.

Debt Issuance Costs.  Debt issuance costs represent fees and other direct costs incurred in connection with the Company’s borrowings. These amounts are capitalized and amortized ratably over the contractual term of the borrowing. In January 31, 2011, the Company fully repaid its outstanding secured credit borrowing facility which had a balance of $86.7 million as of December 31, 2010 and, at repayment, all related debt issuance costs were fully amortized. During March 2011, the Company issued $60 million of convertible senior notes (the “Convertible Senior Notes”) and incurred debt issuance costs of approximately $2.4 million which will be amortized over a five-year period. At December 31, 2011, there was an unamortized debt issuance cost of approximately $2.0 million included in other assets in the accompanying balance sheet. Amortization expense for the year ended December 31, 2011 and 2010 was approximately $353,000 and $596,000, respectively.

Expenses.  The Company is internally managed and expenses costs, as incurred, with regard to the running of its operations. Primary operating expenses include employee salaries and benefits, the costs of identifying, evaluating, negotiating, closing, monitoring and servicing the Company’s investments and related overhead charges and expenses, including rental expense, and any interest expense incurred in connection with borrowings. The Company and its asset manager affiliates share office space and certain other operating expenses. The Company has entered into an Overhead Allocation Agreement with its asset manager affiliates which provides for the sharing of such expenses based on an equal sharing of office lease costs and the ratable usage of other shared resources. The aggregate net payments of such expenses under the Overhead Allocation Agreement are not material.

Dividends.  Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is generally based upon the earnings estimated by management for the period and year.

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES  – (continued)

The Company has adopted a dividend reinvestment plan that provides for reinvestment of its distributions on behalf of its stockholders, unless a stockholder “opts out” of the plan to receive cash in lieu of having their cash dividends automatically reinvested in additional shares of the Company’s common stock.

Recent Accounting Pronouncements

Improved Disclosures Regarding Fair Value Measurements.  In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Improving Disclosures About Fair Value Measurements (Topic 820), which provides for improving disclosures about fair value measurements, primarily significant transfers in and out of Levels I and II, and activity in Level III fair value measurements. The new disclosures and clarifications of existing disclosures are effective for the interim and annual reporting periods beginning after December 15, 2009, while the disclosures about the purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010 and for the interim periods within those fiscal years. Except for certain detailed Level III disclosures, which are effective for fiscal years beginning after December 15, 2010 and interim periods within those years, the new guidance became effective for the Company’s fiscal 2010 second quarter. The adoption of this disclosure-only guidance is included in Note 4 “— Portfolio Investments” and did not have a material impact on the Company’s financial results.

In May 2011, the FASB issued FASB Accounting Standards Update (“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments in this ASU generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This ASU results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The amendments in this ASU are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. Management currently believes that the adoption of this ASU will not have a material impact on the Company’s operating results, financial position or cash flows.

3. EARNINGS (LOSSES) PER SHARE

The following information sets forth the computation of basic and diluted net increase (decrease) in stockholders’ equity per share for the years ended December 31, 2011, 2010, and 2009:

		For the Years ended December 31,
		2011				2010				2009
Net increase (decrease) in net assets from operations		$	7,649,544			$	(14,288,677	)		$	34,403,270
Net increase (decrease) in net assets available to common stockholders			7,649,544				(14,288,677	)			34,403,270
Weighted average number of common shares outstanding for basic shares computation			22,868,647				22,598,185				22,105,800
Effect of dilutive securities – stock options			—				—				—
Weighted average number of common and common stock equivalent shares outstanding for diluted shares computation			22,868,647				22,598,185				22,105,800
Net increase (decrease) in net assets per basic common shares:
Net increase (decrease) in Net assets from operations(1)			0.33				(0.63	)			1.56

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

3. EARNINGS (LOSSES) PER SHARE  – (continued)

Share-based awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and included in the computation of both basic and diluted earnings per share. Grants of restricted stock awards to our employees and directors are considered participating securities when there are earnings in the period and the earnings per share calculations include outstanding unvested restricted stock awards in the basic weighted average shares outstanding calculation. Included in the weighted average shares outstanding for the year ended December 31, 2011 are 305,221 shares of unvested restricted stock, which were deemed to be participating securities.

Options to purchase 20,000 shares were included in the computation of diluted earnings per share for the year ended December 31, 2011. For the year ended December 31, 2010, options to purchase 40,000 shares were not included in the computation of diluted earnings per share because the effect would be antidilutive as the exercise prices exceeded the average market price of the common shares.

The Company’s Convertible Senior Notes are included in the computation of the diluted net increase or decrease in net assets resulting from operations per share in accordance with ASC 261-10-45-40-b by application of the “if-converted method.” Under the if-converted method, interest charges applicable to the convertible debt for the period are added to the reported net increase or decrease in net assets resulting from operations and the full amount of shares (pro-rata if not outstanding for the full period) that would be issued are added to weighted average basic shares. Convertible debt is considered anti-dilutive only when its interest per share upon conversion exceeds the basic net increase or decrease in net assets resulting from operations per share. For the year ended December 31, 2011, the convertible debt is anti-dilutive.

The if-converted method of computing the dilutive effects on convertible debt assumes a conversion even if the contracted conversion price exceeds the market value of the shares. The Company’s Convertible Senior Notes have a conversion price of $8.44 per share which was above the Company’s net asset value per share at the time of issuance. Upon conversion, the Company would issue the full amount of common stock upon conversion and retire the full amount of debt outstanding.

On February 29, 2012, the Company completed the acquisition of Trimaran Advisors, L.L.C. (“Trimaran”) through a newly-formed, wholly-owned subsidiary of the Company. The aggregate consideration paid for all of the outstanding equity interests in Trimaran consisted of $13.0 million in cash and 3,600,000 shares of common stock, par value $0.01 per share, of the Company. The change in the number of common shares outstanding at December 31, 2011 as if this acquisition had closed prior to year end would be an increase of 3,600,000 common shares to a total outstanding share amount of 26,367,130.

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

4. INVESTMENTS

The Company invests in senior secured loans and mezzanine debt and, to a lesser extent, equity capital of middle market companies in a variety of industries. The Company generally targets companies that generate positive cash flows because the Company looks to cash flows as the primary source for servicing debt. However, the Company may invest in other industries if it is presented with attractive opportunities.

The following table shows the Company’s portfolio by security type at December 31, 2011 and December 31, 2010:

		December 31, 2011												December 31, 2010
Security Type		Cost				Fair Value				%				Cost				Fair Value				%
Time Deposits		$	229,152			$	229,152				—	%		$	720,225			$	720,225				—	%
Money Market Account			31,622,134				31,622,134				18				210,311				210,311				—
Senior Secured Loan			54,045,184				45,259,328				25				34,183,551				22,001,256				12
Junior Secured Loan			58,936,728				47,300,172				26				76,896,867				63,944,003				34
Mezzanine Investment			10,931,428				11,588,115				6				10,744,496				250,000				—
Senior Subordinated Bond			9,997,898				10,125,891				6				4,320,596				4,490,709				3
CLO Fund Securities			65,209,809				46,412,000				26				68,280,200				53,031,000				28
Equity Securities			16,559,610				6,040,895				3				13,232,266				4,437,871				3
Preferred			400,000				400,000				—				650,961				607,921				—
Affiliate Asset Managers			44,338,301				40,814,000				23				44,532,329				41,493,000				22
Total		$	292,270,244			$	239,791,687				133	%		$	253,771,802			$	191,186,296				102	%

KOHLBERG CAPITAL CORPORATION
  
NOTES TO FINANCIAL STATEMENTS

4. INVESTMENTS  – (continued)

The industry concentrations, based on the fair value of the Company’s investment portfolio as of December 31, 2011 and December 31, 2010, were as follows:

		December 31, 2011												December 31, 2010
Industry Classification		Cost				Fair Value				%(1)				Cost				Fair Value				%(1)
Aerospace and Defense		$	19,683,821			$	19,439,230				10	%		$	6,499,518			$	5,613,844				3	%
Asset Management Company(2)			44,338,301				40,814,000				23				44,532,329				41,493,000				22
Beverage, Food and Tobacco			9,892,274				9,796,565				5				—				—				—
Broadcasting and Entertainment(3)			—				—				—				—				—				—
Buildings and Real Estate			18,591,674				662,443				—				32,845,509				6,923,964				4
Cargo Transport			4,374,350				4,374,351				2				4,940,182				4,940,182				3
Chemicals, Plastics and Rubber			4,809,459				4,614,828				3				—				—				—
CLO Fund Securities			65,209,809				46,412,000				26				68,280,200				53,031,000				28
Containers, Packaging and Glass			—				—				—				3,009,682				3,000,000				2
Diversified/Conglomerate Manufacturing			6,905,447				7,000,000				4				—				—				—
Diversified/Conglomerate Service			2,870,642				372,599				—				10,384,036				8,345,287				4
Electronics			8,831,440				9,026,186				5				3,006,137				3,176,250				2
Healthcare, Education and Childcare			20,956,582				19,523,824				11				15,113,551				15,037,936				8
Home and Office Furnishings, Housewares, and Durable Consumer Products			21,683,112				20,604,850				11				9,654,903				8,804,450				5
Insurance			4,919,522				3,753,000				2				4,890,322				4,049,000				2
Leisure, Amusement, Motion Pictures, Entertainment			2,290,892				2,084,012				1				2,114,458				1,983,619				1
Machinery (Non-Agriculture, Non-Construction, Non-Electronic)			3,483,174				3,891,900				2				3,477,696				3,864,600				2
Mining, Steel, Iron and Non-Precious Metals			797,091				438,913				—				14,381,863				14,430,312				8
Personal and Non Durable Consumer Products (Mfg. Only)			5,000,000				3,250,000				2				5,000,000				3,435,000				2
Personal, Food and Miscellaneous Services			2,872,500				2,827,359				2				14,730,350				4,090,000				2
Personal Transportation			2,993,092				2,983,648				2				—				—				—
Printing and Publishing			1,044,539				1,223,743				1				5,980,529				5,669,716				3
Retail Stores			1,885,086				1,932,500				1				—				—				—
Telecommunications			2,986,151				2,776,950				2				—				—				—
Time Deposit and Money Market Accounts			31,851,286				31,851,286				18				930,537				930,536				—
Utilities			4,000,000				137,500				—				4,000,000				2,367,600				1
Total		$	292,270,244			$	239,791,687				133	%		$	253,771,802			$	191,186,296				102	%