BBDC 10-Q Quarterly Report June 30, 2015 | Alphaminr
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BBDC 10-Q Quarter ended June 30, 2015

Balance Sheet
Cash Flow
Income Statement
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10-Q 1 a2015063010qtcap.htm 10-Q 20150630 10Q TCAP
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________
Form 10-Q
__________________________________________________________
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission file number 814-00733
__________________________________________________________
Triangle Capital Corporation
(Exact name of registrant as specified in its charter)
__________________________________________________________
Maryland
06-1798488
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
3700 Glenwood Avenue, Suite 530
Raleigh, North Carolina
27612
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (919) 719-4770
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A
__________________________________________________________
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 ý No ¨
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
Accelerated filer
¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨ No ý
The number of shares outstanding of the registrant’s Common Stock on August 5, 2015 was 33,272,167 .



TRIANGLE CAPITAL CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q

Page
PART I – FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TRIANGLE CAPITAL CORPORATION
Consolidated Balance Sheets
June 30, 2015
December 31, 2014
(Unaudited)
Assets:
Investments at fair value:
Non-Control / Non-Affiliate investments (cost of $677,505,732 and $717,233,688 at June 30, 2015 and December 31, 2014, respectively)
$
662,866,063

$
693,312,886

Affiliate investments (cost of $193,995,315 and $175,182,171 at June 30, 2015 and December 31, 2014, respectively)
197,281,194

178,935,236

Control investments (cost of $46,406,803 and $29,636,763 at June 30, 2015 and December 31, 2014, respectively)
24,751,233

14,975,000

Total investments at fair value
884,898,490

887,223,122

Cash and cash equivalents
117,547,039

78,759,026

Interest and fees receivable
6,834,561

7,409,105

Prepaid expenses and other current assets
646,272

438,861

Deferred financing fees
3,682,831

1,230,577

Property and equipment, net
116,619

108,753

Total assets
$
1,013,725,812

$
975,169,444

Liabilities:
Accounts payable and accrued liabilities
$
3,417,774

$
7,144,673

Interest payable
3,577,430

3,365,237

Taxes payable
54,152

2,506,031

Deferred income taxes
4,117,502

3,363,669

Payable from unsettled transaction
16,961,500

—

Borrowings under credit facility
88,758,498

62,619,883

Notes
161,850,261

145,646,224

SBA-guaranteed debentures payable
220,171,914

219,697,098

Total liabilities
498,909,031

444,342,815

Commitments and contingencies (Note 7)
Net Assets:
Common stock, $0.001 par value per share (150,000,000 shares authorized, 33,272,167 and 32,950,288 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively)
33,272

32,950

Additional paid in capital
544,771,957

542,119,994

Investment income in excess of distributions
6,138,723

12,926,514

Accumulated realized gains (losses)
(1,337,335
)
12,464,699

Net unrealized appreciation (depreciation)
(34,789,836
)
(36,717,528
)
Total net assets
514,816,781

530,826,629

Total liabilities and net assets
$
1,013,725,812

$
975,169,444

Net asset value per share
$
15.47

$
16.11


See accompanying notes.


3


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
Three Months
Ended
Three Months
Ended
Six Months Ended
Six Months Ended
June 30,
2015
June 30,
2014
June 30,
2015
June 30,
2014
Investment income:
Interest income:
Non-Control / Non-Affiliate investments
$
16,982,885

$
15,241,853

$
33,941,585

$
29,710,399

Affiliate investments
4,199,380

2,208,077

8,390,729

4,564,512

Control investments
49,481

43,835

49,481

87,343

Total interest income
21,231,746

17,493,765

42,381,795

34,362,254

Dividend income:
Non-Control / Non-Affiliate investments
45,689

787,689

1,634,394

1,051,616

Affiliate investments
281,369

207,899

537,622

1,148,070

Total dividend income
327,058

995,588

2,172,016

2,199,686

Fee and other income:
Non-Control / Non-Affiliate investments
835,092

1,263,026

4,072,438

3,038,318

Affiliate investments
1,500,096

383,616

1,997,053

663,801

Control investments
100,000

600,000

200,000

701,852

Total fee and other income
2,435,188

2,246,642

6,269,491

4,403,971

Payment-in-kind interest income:
Non-Control / Non-Affiliate investments
2,613,528

3,404,283

5,341,851

6,402,060

Affiliate investments
1,150,008

736,516

2,319,009

1,467,173

Control investments
—

6,084

—

12,071

Total payment-in-kind interest income
3,763,536

4,146,883

7,660,860

7,881,304

Interest income from cash and cash equivalents
67,376

56,888

120,312

131,496

Total investment income
27,824,904

24,939,766

58,604,474

48,978,711

Operating expenses:
Interest and other financing fees
7,325,340

5,158,543

13,757,795

10,298,055

General and administrative expenses
4,333,379

5,122,875

10,910,915

10,178,967

Total operating expenses
11,658,719

10,281,418

24,668,710

20,477,022

Net investment income
16,166,185

14,658,348

33,935,764

28,501,689

Realized and unrealized gains (losses) on investments and foreign currency borrowings:
Net realized gains (losses):
Non-Control / Non-Affiliate investments
3,178,433

11,462,275

6,415,102

11,734,476

Affiliate investments
238,806

228,252

266,508

228,252

Control investments
(20,483,644
)
—

(20,483,644
)
(208,553
)
Net realized gains (losses)
(17,066,405
)
11,690,527

(13,802,034
)
11,754,175

Net unrealized appreciation (depreciation):
Investments
14,782,147

(1,172,480
)
1,066,307

(2,670,950
)
Foreign currency borrowings
(312,322
)
(395,269
)
861,385

(34,734
)
Net unrealized appreciation (depreciation)
14,469,825

(1,567,749
)
1,927,692

(2,705,684
)
Net realized and unrealized gains (losses) on investments and foreign currency borrowings
(2,596,580
)
10,122,778

(11,874,342
)
9,048,491

Loss on extinguishment of debt
(1,394,017
)
—

(1,394,017
)
—

Provision for taxes
—

(586,788
)
(137,875
)
(853,343
)
Net increase in net assets resulting from operations
$
12,175,588

$
24,194,338

$
20,529,530

$
36,696,837

Net investment income per share—basic and diluted
$
0.49

$
0.53

$
1.02

$
1.02

Net increase in net assets resulting from operations per share—basic and diluted
$
0.37

$
0.87

$
0.62

$
1.32

Dividends/distributions per share:
Regular quarterly dividends/distributions
$
0.54

$
0.54

$
1.08

$
1.08

Supplemental dividends/distributions
0.05

0.15

0.10

0.30

Total dividends/distributions per share
$
0.59

$
0.69

$
1.18

$
1.38

Weighted average shares outstanding—basic and diluted
33,234,532

27,910,468

33,166,865

27,857,788


See accompanying notes.

4


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Changes in Net Assets
Common Stock
Additional
Paid In
Capital
Investment
Income
in Excess of
Distributions
Accumulated
Realized
Gains on Investments
Net
Unrealized
Appreciation(Depreciation)
Total
Net
Assets
Number
of Shares
Par
Value
Balance, December 31, 2013
27,697,483

$
27,697

$
409,042,893

$
8,610,735

$
20,665,371

$
7,445,434

$
445,792,130

Net investment income
—

—

—

28,501,689

—

—

28,501,689

Stock-based compensation
—

—

2,828,410

—

—

—

2,828,410

Realized gain (loss) on investments
—

—

—

—

11,754,175

(11,616,980
)
137,195

Net unrealized gains (losses) on investments / foreign currency
—

—

—

—

—

8,911,296

8,911,296

Provision for taxes
—

—

—

(853,343
)
—

—

(853,343
)
Dividends / distributions
53,577

54

1,426,147

(30,126,554
)
(8,368,487
)
—

(37,068,840
)
Issuance of restricted stock
282,630

282

(282
)
—

—

—

—

Common stock withheld for payroll taxes upon vesting of restricted stock
(93,895
)
(93
)
(2,474,028
)
—

—

—

(2,474,121
)
Balance, June 30, 2014
27,939,795

$
27,940

$
410,823,140

$
6,132,527

$
24,051,059

$
4,739,750

$
445,774,416

Common Stock
Additional
Paid In
Capital
Investment
Income
in Excess of
Distributions
Accumulated
Realized
Gains on Investments
Net
Unrealized
Appreciation (Depreciation)
Total
Net
Assets
Number
of Shares
Par
Value
Balance, December 31, 2014
32,950,288

$
32,950

$
542,119,994

$
12,926,514

$
12,464,699

$
(36,717,528
)
$
530,826,629

Net investment income
—

—

—

33,935,764

—

—

33,935,764

Stock-based compensation
—

—

3,412,181

—

—

—

3,412,181

Realized gain (loss) on investments
—

—

—

—

(13,802,034
)
14,380,376

578,342

Net unrealized loss on investments / foreign currency
—

—

—

—

—

(12,452,684
)
(12,452,684
)
Loss on extinguishment of debt
—

—

—

(1,394,017
)
—

—

(1,394,017
)
Provision for taxes
—

—

—

(137,875
)
—

—

(137,875
)
Dividends / distributions
71,248

71

1,695,352

(39,191,663
)


—

(37,496,240
)
Expenses related to public offering of common stock
—

—

(54,967
)
—

—

—

(54,967
)
Issuance of restricted stock
360,840

361

(361
)
—

—

—

—

Common stock withheld for payroll taxes upon vesting of restricted stock
(110,209
)
(110
)
(2,400,242
)
—

—

—

(2,400,352
)
Balance, June 30, 2015
33,272,167

$
33,272

$
544,771,957

$
6,138,723

$
(1,337,335
)
$
(34,789,836
)
$
514,816,781


See accompanying notes.


5


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
Six Months Ended
Six Months Ended
June 30, 2015
June 30, 2014
Cash flows from operating activities:
Net increase in net assets resulting from operations
$
20,529,530

$
36,696,837

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of portfolio investments
(163,270,565
)
(164,840,342
)
Repayments received/sales of portfolio investments
154,211,535

105,026,498

Loan origination and other fees received
2,819,164

2,838,426

Net realized loss (gain) on investments
13,802,034

(11,754,175
)
Net unrealized depreciation (appreciation) on investments
(1,820,140
)
1,867,995

Net unrealized depreciation (appreciation) on foreign currency borrowings
(861,385
)
34,734

Deferred income taxes
753,833

802,955

Payment-in-kind interest accrued, net of payments received
23,501

(2,614,188
)
Amortization of deferred financing fees
1,107,207

800,583

Loss on extinguishment of debt
1,394,017

—

Accretion of loan origination and other fees
(3,202,668
)
(1,783,603
)
Accretion of loan discounts
(238,229
)
(644,575
)
Accretion of discount on SBA-guaranteed debentures payable
92,784

90,792

Depreciation expense
29,225

20,114

Stock-based compensation
3,412,181

2,828,410

Changes in operating assets and liabilities:
Interest and fees receivable
574,544

1,186,064

Prepaid expenses and other current assets
(207,411
)
238,828

Accounts payable and accrued liabilities
(3,726,899
)
(4,277,738
)
Interest payable
212,193

4,770

Taxes payable
(2,451,879
)
(655,858
)
Payable from unsettled transaction
16,961,500

—

Net cash provided by (used in) operating activities
40,144,072

(34,133,473
)
Cash flows from investing activities:
Purchases of property and equipment
(37,091
)
(34,827
)
Net cash used in investing activities
(37,091
)
(34,827
)
Cash flows from financing activities:
Borrowings under credit facility
83,000,000

20,000,000

Repayments of credit facility
(56,000,000
)
—

Proceeds from notes
83,372,640

—

Redemption of notes
(69,000,000
)
—

Financing fees paid
(2,740,049
)
—

Expenses related to public offering of common stock
(54,967
)
—

Common stock withheld for payroll taxes upon vesting of restricted stock
(2,400,352
)
(2,474,121
)
Cash dividends/distributions paid
(37,496,240
)
(37,068,840
)
Net cash used in financing activities
(1,318,968
)
(19,542,961
)
Net increase (decrease) in cash and cash equivalents
38,788,013

(53,711,261
)
Cash and cash equivalents, beginning of period
78,759,026

133,304,346

Cash and cash equivalents, end of period
$
117,547,039

$
79,593,085

Supplemental disclosure of cash flow information:
Cash paid for interest
$
11,673,774

$
9,008,748

Summary of non-cash financing transactions:
Dividends/distributions paid through DRIP share issuances
$
1,695,423

$
1,426,201


See accompanying notes.


6


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Non–Control / Non–Affiliate Investments:
Agilex Flavors & Fragrances, Inc. (3%)*
Custom Fragrance Producer
Subordinated Note (12% Cash, 1.5% PIK, Due 06/19)
$
12,989,699

$
12,814,036

$
12,814,036

Common Units (1,250 units)
1,250,000

2,088,000

12,989,699

14,064,036

14,902,036

AGM Automotive, LLC (0%)*
Auto Industry Interior Components Suppler
Class A Units (1,500,000 units)
630,134

1,216,000



630,134

1,216,000

All Metro Health Care Services, Inc. (3%)* (8)
Home Care Service Provider
Subordinated Note (10% Cash, 2% PIK, Due 03/20)
17,350,000

16,966,500

16,966,500

17,350,000

16,966,500

16,966,500

Applied-Cleveland Holdings, Inc. (5%)*
Oil and Gas Pipeline Infrastructure Inspection Services
Subordinated Note (10% Cash, 2% PIK, Due 06/19)
23,232,249

22,943,862

22,943,862

Class A Units (2,129,032 units)
2,129,032

1,774,000

23,232,249

25,072,894

24,717,862

Audio and Video Labs Holdings, Inc. (2%)*
Manufacturer and Distributor for Independent Artists and Authors
Subordinated Note (12% Cash, 2% PIK, Due 06/18)
10,401,251

10,272,412

10,272,412

Common Stock (138 shares)
1,300,000

1,590,000

10,401,251

11,572,412

11,862,412

BFN Operations LLC (2%)*
Wholesale Grower and Distributor of Container Grown Shrubs, Trees and Plants
Subordinated Note (13% Cash, 4% PIK, Due 11/20)
16,636,639

16,274,785

10,517,000

16,636,639

16,274,785

10,517,000

Botanical Laboratories, Inc. (0%)*
Nutritional Supplement Manufacturing and Distribution
Common Stock Warrants (998,680 shares)
237,301

384,000

237,301

384,000

Cafe Enterprises, Inc. (3%)*
Restaurant
Subordinated Note (12% Cash, 2% PIK, Due 09/19)
12,313,772

12,115,498

12,115,498

Series C Preferred Stock (10,000 shares)
1,000,000

1,000,000

12,313,772

13,115,498

13,115,498

Capital Contractors, Inc. (1%)*
Janitorial and Facilities Maintenance Services
Subordinated Notes (5% Cash, Due 12/16)
9,843,542

9,585,227

7,441,000

Series A Redeemable Preferred Stock (200 shares)
2,000,000

—

Common Stock Warrants (20 shares)
492,000

—

9,843,542

12,077,227

7,441,000

Carolina Beverage Group, LLC (0%)*
Beverage Manufacturing
and Packaging
Class B Units (11,974 units)
119,735

529,000

119,735

529,000

Chromaflo Technologies Parent LP (2%)*
Colorant Manufacturer and Distributor
Second Lien Term Loan (8.3% Cash, Due 06/20)
9,999,618

9,958,923

9,958,923

Class A Units (22,561 units)
906,604

2,264,000

9,999,618

10,865,527

12,222,923

Comverge, Inc. (3%)*
Provider of Intelligent Energy Management Solutions
Senior Note (12% Cash, Due 05/18)
15,505,583

15,323,979

15,323,979

Preferred Stock (703 shares)
554,458

493,000

Common Stock (1,000,000 shares)
100,000

—

15,505,583

15,978,437

15,816,979

Continental Anesthesia Management, LLC (2%)*
Physicians Management
Services
Subordinated Note (10% Cash, 4% PIK Due 04/16)
10,463,794

10,459,316

10,459,316

Warrant (263 shares)
276,100

39,000

10,463,794

10,735,416

10,498,316

CPower Ultimate HoldCo, LLC (0%)*
Demand Response Business
Units (345,542 units)
345,542

345,542

345,542

345,542

CWS Acquisition Corp. (3%)*
Manufacturer of Custom Windows and Sliding Doors
Subordinated Note (11% Cash, 2% PIK, Due 01/20)
16,401,721

16,159,530

16,401,721

1,500,000 Class A Units
1,500,000

1,500,000

16,401,721

17,659,530

17,901,721


7


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Danville Materials, LLC (2%)*
Manufacturer of Dental Products
Subordinated Note (10% Cash, Due 12/18)
$
8,000,000

$
7,882,681

$
7,882,681

Common Units (45,492 units)
500,000

845,000

8,000,000

8,382,681

8,727,681

Data Source Holdings, LLC (0%)*
Print Supply Chain Management Services
Common Units (47,503 units)
1,000,000

929,000



1,000,000

929,000

DCWV Acquisition Corporation
(1%)*
Arts & Crafts and Home Decor Products Designer and Supplier
Subordinated Note (12% Cash, 3% PIK, Due 09/17) (5)
6,617,147

6,178,633

3,958,000

Series A Preferred Equity (1,200 shares)
1,200,000

—

6,617,147

7,378,633

3,958,000

DialogDirect, Inc. (5%)*
Business Process Outsourcing Provider
Subordinated Note (12% Cash, 1.5% PIK, Due 04/20)
24,249,162

24,033,554

24,033,554

24,249,162

24,033,554

24,033,554

DLC Acquisition, LLC (5%)*
Staffing Firm
Senior Notes (10% Cash, Due 07/19)
23,850,000

23,454,829

23,454,829

23,850,000

23,454,829

23,454,829

DLR Restaurants, LLC (0%)*
Restaurant
Royalty Rights
—

—

—

—

Dyno Acquiror, Inc. (1%)*
Sewing Products and Seasonal Decorative Products Supplier
Subordinated Note (12% Cash, 2% PIK, Due 11/18)
7,308,929

7,212,340

7,212,340

Series A Units (600,000 units)
600,000

371,000

7,308,929

7,812,340

7,583,340

Eckler's Holdings, Inc. (1%)*
Restoration Parts and Accessories for Classic Cars and Trucks
Subordinated Note (11% Cash, 4% PIK, Due 07/18) (6)
8,013,380

7,262,454

6,835,000

Common Stock (18,029 shares)
183,562

—

Preferred Stock A (1,596 shares)
1,596,126

—

8,013,380

9,042,142

6,835,000

Electronic Systems Protection, Inc. (0%)*
Power Protection Systems Manufacturing
Common Stock (570 shares)
285,000

524,000

285,000

524,000

FCL Graphics, Inc. (0%)*
Commercial Printing Services
Senior Note (4.7% Cash, Due 09/16)
1,067,561

1,067,561

933,000

Senior Note (7.8% Cash, 2% PIK, Due 09/16) (5)
1,232,154

1,207,439

—

2,299,715

2,275,000

933,000

Flowchem Ltd. (2%)*
Provider of Support Services to Crude Oil Pipeline Operators
Subordinated Note (11% Cash, 2% PIK, Due 06/19)
7,956,475

7,835,038

7,835,038

Common Units (1,000,000 units)
914,835

1,719,000

7,956,475

8,749,873

9,554,038

FrontStream Payments, Inc. (2%)*
Payment and Donation Management Product Service Provider
Subordinated Note (12.5% Cash Due 12/20)
12,500,000

12,365,232

12,365,232

12,500,000

12,365,232

12,365,232

Frontstreet Facility Solutions, Inc. (1%)*
Retail, Restaurant and Commercial Facilities Maintenance
Subordinated Note (13% Cash, Due 07/18)
8,462,629

8,379,798

5,841,000

Series A Convertible Preferred Stock (2,500 shares)
250,000

—

Series B Convertible Preferred Stock (5,556 shares)
500,000

—

8,462,629

9,129,798

5,841,000

Frozen Specialties, Inc. (2%)*
Frozen Foods Manufacturer
Subordinated Note (10% Cash, 4% PIK, Due 05/17)
12,868,637

12,868,637

10,764,000

12,868,637

12,868,637

10,764,000

Garden Fresh Restaurant Holding, LLC (0%)*
Restaurant
Class A Units (5,000 units)
500,000

41,000

500,000

41,000

Gilchrist & Soames, Inc. (7%)*
Manufacturer of Personal Care Products
Split Collateral Term Loan (10% Cash, 1.5% PIK, Due 11/19)
35,153,443

34,670,061

34,670,061

35,153,443

34,670,061

34,670,061


8


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
GST AutoLeather, Inc. (4%)*
Supplier of Automotive Interior Leather
Subordinated Note (11% Cash, 2% PIK, Due 01/21)
$
22,437,106

$
22,041,446

$
22,041,446

22,437,106

22,041,446

22,041,446

Hatch Chile Co., LLC (1%)*
Food Products Distributor
Subordinated Note (19% Cash, Due 11/18)
2,874,375

2,874,375

2,874,375

Subordinated Note (14% Cash, Due 11/18)
3,148,125

2,998,539

2,998,539

Unit Purchase Warrant (7,817 units)
295,800

618,000

6,022,500

6,168,714

6,490,914

Hickman's Egg Ranch, Inc. (3%)*
Egg Producer
Subordinated Note (12% Cash, Due 06/19)
15,049,229

14,795,939

14,795,939

15,049,229

14,795,939

14,795,939

HKW Capital Partners IV, L.P.
(0%)* (4)
Multi-Sector Holdings
0.6% Limited Partnership Interest
778,294

701,000

778,294

701,000

HTC Borrower, LLC (5%)*
Hunting and Outdoor Products
Subordinated Note (10% Cash, 3% PIK, Due 09/20)
25,237,863

24,875,856

24,875,856

25,237,863

24,875,856

24,875,856

Huron, Inc. (3%)*
Parts Supplier to Automotive Industry
Subordinated Note (10% Cash, 3% PIK, Due 08/18)
13,855,242

13,800,460

13,800,460

13,855,242

13,800,460

13,800,460

Inland Pipe Rehabilitation Holding Company LLC (2%)*
Cleaning and Repair Services
Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)
8,713,217

8,678,040

8,678,040

Membership Interest Purchase Warrant (3%)
853,500

1,227,000

8,713,217

9,531,540

9,905,040

Justrite Manufacturing Company, LLC (3%)*
Storage Product Developer and Supplier for Hazardous Materials
Subordinated Note (10% Cash, 2% PIK, Due 07/19)
14,926,427

14,757,063

14,757,063

Class A Common Units (1,268 units)
118,110

265,000

Class A Preferred Units (132 units)
131,890

178,000

14,926,427

15,007,063

15,200,063

Magpul Industries Corp. (1%)*
Firearm Accessories Manufacturer and Distributor
Preferred Units (1,470 units)
1,470,000

2,456,000

Common Units (30,000 units)
30,000

1,523,000

1,500,000

3,979,000

Media Storm, LLC (1%)*
Marketing Services
Subordinated Note (10% Cash, Due 08/19)
6,545,455

6,513,303

6,513,303

Membership Units (1,216,204 units)
1,176,957

1,256,000

6,545,455

7,690,260

7,769,303

Micross Solutions LLC (5%)*
Provider of Semiconductor Products and Services
Subordinated Note (12% Cash, 3% PIK, Due 06/18)
23,341,770

23,171,170

23,171,170

Class A-2 Common Units (1,979,524 units)
2,019,693

1,683,000

23,341,770

25,190,863

24,854,170

My Alarm Center, LLC (0%)*
Security Company
Preferred Units (2,000,000 units)
2,000,000

1,846,000

2,000,000

1,846,000

Nautic Partners VII, LP (0%)*
Multi-Sector Holdings
0.4% Limited Partnership Interest
697,325

891,000

697,325

891,000

Nomacorc, LLC (4%)*
Synthetic Wine Cork Producer
Subordinated Note (10% Cash, 1.8% PIK, Due 07/21)
20,172,453

19,794,945

19,794,945

Limited Partnership Interest
2,259,339

2,259,339

20,172,453

22,054,284

22,054,284

On Event Services, LLC (4%)*
Equipment Rentals
Subordinated Note (10% Cash, 2% PIK, Due 06/20)
21,620,018

20,850,954

20,850,954

Warrant to Purchase Units (5.4%)
1,252,000

1,252,000

21,620,018

22,102,954

22,102,954

Orchid Underwriters Agency, LLC (5%)*
Insurance Underwriter
Term B Note (10% Cash, Due 11/19)
22,885,000

22,458,739

22,458,739

Class A Preferred Units (15,000 units)
1,500,000

1,626,000

Class A Common Units (15,000 units)
—

170,000

22,885,000

23,958,739

24,254,739


9


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Performance Health & Wellness Holdings, Inc. (1%)*
Rehabilitation and Wellness Products
Class A Limited Partnership Units (15,000 units)
$
1,500,000

$
2,622,000



1,500,000

2,622,000

PowerDirect Marketing, LLC (1%)*
Marketing Services
Subordinated Note (13% Cash, 2% PIK, Due 12/16) (6)
$
8,122,393

6,627,482

4,154,000

Common Unit Purchase Warrants
590,200

—

8,122,393

7,217,682

4,154,000

Radiant Logistics, Inc. (3%)*
Freight Logistics
Subordinated Note (12% Cash, Due 04/21)
15,000,000

14,708,714

14,708,714

15,000,000

14,708,714

14,708,714

RockYou, Inc. (0%)*
Mobile Game Advertising Network
Common Stock (67,585 shares)
111,000

111,000

111,000

111,000

SPC Partners V, LP (0%)* (4)
Multi-Sector Holdings
0.7% Limited Partnership Interest
745,539

704,000

745,539

704,000

Specialized Desanders, Inc. (4%)* (4)
Sand and Particulate Removal Equipment Provider for Oil and Gas Companies
Subordinated Note (12% Cash, 2% PIK, Due 03/20)
16,110,043

15,895,574

13,544,030

Class C Capital Units (2,000,000 units)
1,937,421

4,617,000

16,110,043

17,832,995

18,161,030

TACH Holdings, Inc. (f/k/a Trinity Consultants Holdings, Inc.) (3%)*
Air Quality Consulting Services
Subordinated Note (10% Cash, 3% PIK, Due 08/20)
15,403,942

15,289,333

15,289,333

Series A1 Preferred Stock (10,000 units)
—

132,000

Common Stock (50,000 units)
50,000

1,189,000

15,403,942

15,339,333

16,610,333

Tate's Bake Shop (2%)*
Producer of Baked Goods
Subordinated Note (10% Cash, 3% PIK, Due 02/20)
10,258,212

10,079,524

10,079,524

Limited Partner Interest
999,000

1,232,000

10,258,212

11,078,524

11,311,524

TCFI Merlin LLC (3%)*
Specialty Staffing Service Provider
Senior Note (10% Cash, 1% PIK, Due 09/19)
15,117,914

14,854,034

14,854,034

Limited Partnership Units (500,000 units)
500,000

500,000

15,117,914

15,354,034

15,354,034

The Cook & Boardman Group, LLC (3%)*
Distributor of Doors and Related Products
Subordinated Note (10% Cash, 2.5% PIK, Due 03/20)
14,285,921

14,035,758

14,035,758

Class A Units (1,400,000 units)
1,400,000

1,696,000

14,285,921

15,435,758

15,731,758

The Krystal Company (1%)*
Restaurant
Class A Units of Limited Partnership (2,000 units)
638,260

2,845,000

638,260

2,845,000

Top Knobs USA, Inc. (0%)*
Hardware Designer and Distributor
Common Stock (26,593 shares)
333,994

1,500,000

333,994

1,500,000

United Biologics, LLC (2%)*
Allergy Immunotherapy
Subordinated Note (12% Cash, 2% PIK, Due 03/17)
12,498,259

12,032,227

12,032,227

Class A Common Stock (177,935 shares)
1,999,989

628,000

Class A-1 Common Stock (18,818 shares)
137,324

137,000

Class A-1 Common Kicker Stock (14,114 shares)
—

—

Class A, Class A-1, Class A-1 Kicker & Class B Unit Purchase Warrants
838,117

161,000

12,498,259

15,007,657

12,958,227

Water Pik, Inc. (2%)*
Oral Health and Shower Head Supplier
Second Lien Term Loan (9.8% Cash, Due 01/21)
8,315,789

8,032,801

8,032,801

8,315,789

8,032,801

8,032,801

Wheel Pros Holdings, Inc. (2%)*
Wheel/Rim and Performance Tire Distributor
Subordinated Note (11% Cash, Due 06/20)
9,500,000

9,312,950

9,312,950

Class A Units (2,000 units)
2,000,000

2,769,000

9,500,000

11,312,950

12,081,950


10


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
WSO Holdings, LP (0%)*
Organic/Fair Trade Sugar, Syrup, Nectar and Honey Producer
Common Points (3,000 points)
$
3,000,000

$
1,767,000

3,000,000

1,767,000

Subtotal Non–Control / Non–Affiliate Investments
$
637,836,138

677,505,732

662,866,063

Affiliate Investments:
All Aboard America! Holdings Inc. (3%)*
Motor Coach Operator
Subordinated Note (12% Cash, 3% PIK, Due 12/17)
14,855,491

14,693,268

14,693,268

Membership Units in LLC
2,185,492

2,903,000

14,855,491

16,878,760

17,596,268

American De-Rosa Lamparts, LLC and Hallmark Lighting, LLC (2%)*
Lighting Wholesale and Distribution
Subordinated Note (12% Cash, 2% PIK, Due 06/17)
7,156,512

7,089,304

7,089,304

Membership Units (8,364 units)
620,653

1,666,000

7,156,512

7,709,957

8,755,304

Asset Point, LLC (2%)*
Asset Management Software Provider
Senior Note (11.3% Cash, 4.8% PIK, Due 06/15)
8,182,903

8,182,901

8,182,901

Subordinated Note (12% Cash, 2% PIK, Due 07/15)
662,937

662,937

662,937

Membership Units (1,000,000 units)
8,203

—

Options to Purchase Membership Units (342,407 units)
500,000

206,000

Membership Unit Warrants (356,506 units)
—

—

8,845,840

9,354,041

9,051,838

Captek Softgel International, Inc.
(4%)*
Nutraceutical Manufacturer
Subordinated Note (9.5% Cash, Due 02/20)
16,872,635

16,728,480

16,728,480

Class A Units (80,000 units)
737,468

1,758,000

16,872,635

17,465,948

18,486,480

CIS Secure Computing Inc. (2%)*
Secure Communications and Computing Solutions Provider
Subordinated Note (12% Cash, 4% PIK, Due 06/17)
11,110,612

11,063,222

10,412,000

Common Stock (84 shares)
502,320

46,000

11,110,612

11,565,542

10,458,000

DPII Holdings, LLC (1%)*
Satellite Communication Business
Senior Note (12% Cash, 4% PIK, Due 07/17)
3,523,084

3,475,238

3,475,238

Class A Membership Interest (17,308 units)
1,107,692

1,107,692

3,523,084

4,582,930

4,582,930

Dyson Corporation (0%)*
Custom Forging and Fastener Supplies
Common Units (1,000,000 units)
1,000,000

132,000

1,000,000

132,000

Frank Entertainment Group, LLC
(3%)*
Movie Theatre and Family Entertainment Operator
Senior Note (10% Cash, 5.8% PIK, Due 06/18)
9,446,864

9,340,790

9,340,790

Class A Redeemable Preferred Units (10.5% Cash) (196,718 units)
3,934,666

4,566,904

Class B Redeemable Preferred Units (18,667 units)
433,334

1,660,810

Class C Redeemable Preferred Units (8,615 units)
200,000

200,000

Class A Common Units (43,077 units)
1,000,000

—

Class A Common Warrants
632,000

—

9,446,864

15,540,790

15,768,504

Halcyon Healthcare, LLC (3%)*
Provider of Hospice Services
Subordinated Note (10% Cash, Due 10/19)
11,500,000

11,297,068

11,297,068

Preferred Interests (2,000,000 interests)
2,000,000

2,492,000

11,500,000

13,297,068

13,789,068

Main Street Gourmet, LLC (1%)*
Baked Goods Provider
Jr. Subordinated Notes (8% Cash, 2% PIK, Due 08/19)
770,519

763,675

763,675

Preferred Units (233 units)
211,867

349,000

Common B Units (3,000 units)
23,140

1,668,000

Common A Units (1,652 units)
14,993

919,000

770,519

1,013,675

3,699,675


11


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Minco Technology Labs, LLC (0%)*
Semiconductor Distribution
Class A Units (5,000 HoldCo. units)
$
500,000

$
—

Class A Units (3,907 OpCo. units)
3,907

—


503,907

—

NB Products, Inc. (6%)*
Distributor of Work Apparel and Accessories
Subordinated Note (12% Cash, 2% PIK, Due 02/20)
$
20,516,406

20,086,736

20,086,736

Jr. Subordinated Note (10% PIK, Due 02/20)
4,057,822

3,907,927

3,907,927

Series A Redeemable Senior Preferred Stock (7,839 shares)
7,621,648

7,621,648

Common Stock (1,668,691 shares)
333,738

333,738

24,574,228

31,950,049

31,950,049

PCX Aerostructures, LLC (4%)*
Aerospace Component Manufacturer
Subordinated Note (11% Cash, 3% PIK, Due 04/19)
19,720,179

19,412,085

19,412,085

Series A Preferred Stock (5,344 shares)
5,343,953

3,023,000

Class A Common Stock (107,416 shares)
26,854

—

19,720,179

24,782,892

22,435,085

QC Holdings, Inc. (0%)*
Lab Testing Services
Common Stock (1,308 shares)
23,162

16,400

23,162

16,400

Team Waste, LLC (1%)*
Environmental and Facilities Services
Preferred Units (25 units)
5,000,000

5,000,000

5,000,000

5,000,000

Technology Crops, LLC (2%)*
Supply Chain Management Services
Subordinated Note (12% Cash, 5% PIK, Due 03/18)
10,968,808

10,968,807

10,968,807

Common Units (50 units)
500,000

923,000

10,968,808

11,468,807

11,891,807

TGaS Advisors, LLC (2%)*
Advisory Solutions to Pharmaceutical Companies
Senior Note (10% Cash, 1% PIK, Due 11/19)
9,897,811

9,687,429

9,687,429

Preferred Units (1,685,357 units)
1,685,357

1,685,357

9,897,811

11,372,786

11,372,786

UCS Super HoldCo LLC (1%)*
Squid and Wetfish Processor and Distributor
Membership Units (1,000 units)
1,000,000

1,000,000

Participation Interest
2,000,000

2,000,000

3,000,000

3,000,000

United Retirement Plan Consultants, Inc. (0%)*
Retirement Plan Administrator
Preferred A Shares (90,000 shares)
900,000

877,000

Common Shares (10,000 shares)
100,000

—

1,000,000

877,000

Waste Recyclers Holdings, LLC (0%)*
Environmental and Facilities Services
Class A Preferred Units (280 units)
2,251,100

—

Class B Preferred Units (11,484,867 units)
3,304,218

724,000

Common Unit Purchase Warrant (1,170,083 units)
748,900

—

Common Units (153,219 units)
180,783

—

6,485,001

724,000

Wythe Will Tzetzo, LLC (1%)*
Confectionery Goods Distributor
Series A Preferred Units (99,829 units)
—

7,694,000

—

7,694,000

Subtotal Affiliate Investments
149,242,583

193,995,315

197,281,194

Control Investments:
CRS Reprocessing, LLC (3%)*
Fluid
Reprocessing
Services
Senior Notes (3.7% Cash, Due 06/16)
2,942,769

2,942,769

2,942,769

Split Collateral Term Loans (10.5% Cash, Due 06/16)
3,192,464

3,192,464

3,192,464

Series F Preferred Units (705,321 units)
9,134,807

8,725,000

Common Units (15,174 units)
—

—

6,135,233

15,270,040

14,860,233

Gerli & Company (0%)*
Specialty Woven Fabrics Manufacturer
Subordinated Note (13% Cash, Due 09/15) (6)
533,420

375,000

375,000

Subordinated Note (8.5% Cash, Due 09/15) (6)
4,309,972

3,000,000

533,000

Class A Preferred Shares (1,211 shares)
855,000

—

Class C Preferred Shares (744 shares)
—

—

Class E Preferred Shares (400 shares)
161,440

—

Common Stock (300 shares)
100,000

—

4,843,392

4,491,440

908,000


12


TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
June 30, 2015
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
PartsNow!, LLC (0%)*
Printer Parts Distributor
Subordinated Note (15% PIK, Due 08/17) (6)
$
13,527,187

$
11,487,784

$
2,000,000

Preferred Membership Units (5,500,000 units)
5,500,000

—

Common Member Units (1,500,000 units)
1,429,539

—

Royalty Rights
—

—

13,527,187

18,417,323

2,000,000

SRC Worldwide, Inc. (1%)*
Specialty Chemical Manufacturer
Common Stock (5,000 shares)
8,228,000

6,983,000

8,228,000

6,983,000

Subtotal Control Investments
24,505,812

46,406,803

24,751,233

Total Investments, June 30, 2015 (172%)*
$
811,584,533

$
917,907,850

$
884,898,490


*    Fair value as a percent of net assets
(1)
All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted.
(2)
Disclosures of interest rates on notes include cash interest rates and payment-in-kind (“PIK”) interest rates.
(3)
All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors.
(4)
Investment is not a qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).
(5)
PIK non-accrual investment
(6)
Non-accrual investment
(7)
All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's senior secured credit facility or in support of the SBA-guaranteed debentures issued by Triangle Mezzanine Fund LLLP and Triangle Mezzanine Fund II LP.
(8)
Prior to quarter end, the Company closed on a $17.4 million new investment in All Metro Health Care Services, Inc. that had not yet settled as of June 30, 2015. As such, a payable related to this unsettled transaction has been recorded in the Unaudited Consolidated Balance Sheet as of June 30, 2015.


See accompanying notes.


13


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Non–Control / Non–Affiliate Investments:
Agilex Flavors & Fragrances, Inc. (3%)*
Custom Fragrance Producer
Subordinated Note (12% Cash, 1.5% PIK, Due 06/19)
$
12,892,286

$
12,699,948

$
12,699,948

Common Units (1,250 units)
1,250,000

2,253,000

12,892,286

13,949,948

14,952,948

AGM Automotive, LLC (5%)*
Auto Industry Interior Components Supplier
Subordinated Note (10% Cash, 3% PIK, Due 07/19)
25,583,924

25,139,063

25,139,063

Class A Units (1,500,000 units)
1,500,000

2,858,000

25,583,924

26,639,063

27,997,063

Applied-Cleveland Holdings, Inc. (5%)*
Oil and Gas Pipeline Infrastructure Inspection Services
Subordinated Note (10% Cash, 2% PIK, Due 06/19)
23,000,000

22,679,661

22,679,661

Class A Units (2,129,032 units)
2,129,032

2,367,000

23,000,000

24,808,693

25,046,661

Assurance Operations Corporation (0%)*
Metal Fabrication
Common Stock (517 shares)
516,867

1,102,000

516,867

1,102,000

Audio and Video Labs Holdings, Inc. (3%)*
Manufacturer and Distributor for Independent Artists and Authors
Subordinated Note (12% Cash, 2% PIK, Due 06/18)
13,540,605

13,356,317

13,356,317

Common Stock (138 shares)
1,300,000

1,653,000

13,540,605

14,656,317

15,009,317

BFN Operations LLC (3%)*
Wholesale Grower and Distributor of Container Grown Shrubs, Trees and Plants
Subordinated Note (13% Cash, 4% PIK, Due 03/16)
18,274,695

17,996,182

15,768,000

18,274,695

17,996,182

15,768,000

Botanical Laboratories, Inc. (0%)*
Nutritional Supplement Manufacturing and Distribution
Common Stock Warrants (998,680 shares)
237,301

240,000

237,301

240,000

Cafe Enterprises, Inc. (2%)*
Restaurant
Subordinated Note (12% Cash, 2% PIK, Due 09/19)
12,189,999

11,974,291

11,974,291

Series C Preferred Stock (10,000 shares)
1,000,000

1,000,000

12,189,999

12,974,291

12,974,291

Capital Contractors, Inc. (2%)*
Janitorial and Facilities Maintenance Services
Subordinated Notes (12% Cash, 2% PIK, Due 12/15) (5)
9,761,380

9,543,757

6,648,000

Common Stock Warrants (20 shares)
492,000

—

9,761,380

10,035,757

6,648,000

Carolina Beverage Group, LLC (0%)*
Beverage Manufacturing
and Packaging
Class B Units (11,974 units)
119,735

411,000

119,735

411,000

Chromaflo Technologies Parent LP (2%)*
Colorant Manufacturer and Distributor
Second Lien Term Loan (8.3% Cash, Due 06/20)
10,000,000

9,956,076

9,956,076

Class A Units (22,561 units)
906,604

2,163,000

10,000,000

10,862,680

12,119,076

Comverge, Inc. (3%)*
Provider of Intelligent Energy Management Solutions
Senior Note (12% Cash, Due 05/18)
15,505,583

15,299,494

15,299,494

Preferred Stock (703 shares)
554,458

547,000

Common Stock (1,000,000 shares)
100,000

—

15,505,583

15,953,952

15,846,494

Continental Anesthesia Management, LLC (2%)*
Physicians Management
Services
Subordinated Note (9% Cash, 5% PIK Due 04/15)
10,258,619

10,249,950

10,249,950

Warrant (263 shares)
276,100

119,000

10,258,619

10,526,050

10,368,950

CP Power Ultimate HoldCo, LLC (0%)*
Demand Response Business
Units (345,542 units)
345,542

345,542

345,542

345,542

CRS Reprocessing, LLC (2%)*
Fluid
Reprocessing
Services
Senior Note (3.7% cash, Due 06/15)
1,140,000

1,140,000

1,140,000

Subordinated Note (12% Cash, 2% PIK, Due 11/15) (6)
14,057,486

13,206,015

6,974,000

Subordinated Note (12% Cash, 2% PIK, Due 11/15) (6)
14,217,209

12,705,812

3,755,000

Series C Preferred Units (30 units)
288,342

—

Common Unit Warrant (1,406 units)
1,759,556

—

Series D Preferred Units (16 units)
107,074

—

Series E Preferred Units (5 units)
31,651

—

29,414,695

29,238,450

11,869,000


14


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
CWS Acquisition Corp. (3%)*
Manufacturer of Custom Windows and Sliding Doors
Subordinated Note (11% Cash, 2% PIK, Due 01/20)
$
16,238,028

$
15,975,521

$
15,975,521

1,500,000 Class A Units
1,500,000

1,500,000

16,238,028

17,475,521

17,475,521

Danville Materials, LLC (2%)*
Manufacturer of Dental Products
Subordinated Note (10% Cash, Due 12/18)
8,000,000

7,867,746

7,867,746

Common Units (45,492 units)
500,000

669,000

8,000,000

8,367,746

8,536,746

Data Source, Inc. (1%)*
Print Supply Chain Management Services
Subordinated Note (12% Cash, 2% PIK, Due 01/18)
4,865,035

4,758,855

4,758,855

Common Units (47,503 units)
1,000,000

986,000

4,865,035

5,758,855

5,744,855

DCWV Acquisition Corporation
(1%)*
Arts & Crafts and Home Decor Products Designer and Supplier
Subordinated Note (12% Cash, 3% PIK, Due 09/17) (5)
6,518,211

6,166,804

3,260,000

Series A Preferred Equity (500 shares)
500,000

—

6,518,211

6,666,804

3,260,000

DialogDirect, Inc. (4%)*
Business Process Outsourcing Provider
Subordinated Note (12% Cash, 1.5% PIK, Due 04/20)
24,067,084

23,835,050

23,835,050

24,067,084

23,835,050

23,835,050

DLC Acquisition, LLC (4%)*
Staffing Firm
Senior Note (10% Cash, Due 07/19)
21,750,000

21,315,528

21,315,528

21,750,000

21,315,528

21,315,528

DLR Restaurants, LLC (0%)*
Restaurant
Royalty Rights
—

—

—

—

Dyno Acquiror, Inc. (1%)*
Sewing Products and Seasonal Decorative Products Supplier
Subordinated Note (12% Cash, 2% PIK, Due 11/18)
7,236,264

7,127,844

7,127,844

Series A Units (600,000 units)
600,000

336,000

7,236,264

7,727,844

7,463,844

Eckler's Holdings, Inc. (1%)*
Restoration Parts and Accessories for Classic Cars and Trucks
Subordinated Note (11% Cash, 4% PIK, Due 07/18)
7,376,429

7,262,454

5,578,000

Common Stock (18,029 shares)
183,562

—

Preferred Stock A (1,596 shares)
1,596,126

—

7,376,429

9,042,142

5,578,000

Electronic Systems Protection, Inc. (0%)*
Power Protection Systems Manufacturing
Common Stock (570 shares)
285,000

487,000

285,000

487,000

FCL Graphics, Inc. (0%)*
Commercial Printing Services
Senior Note (4.7% Cash, Due 09/16)
1,196,615

1,196,615

1,002,000

Senior Note (7.8% Cash, 2% PIK, Due 09/16) (5)
1,219,837

1,207,439

—

2,416,452

2,404,054

1,002,000

Flowchem Ltd. (2%)*
Provider of Support Services to Crude Oil Pipeline Operators
Subordinated Note (11% Cash, 2% PIK, Due 06/19)
7,917,430

7,784,193

7,784,193

Common Units (1,000,000 units)
1,000,000

1,125,000

7,917,430

8,784,193

8,909,193

FrontStream Payments, Inc. (2%)*
Payment and Donation Management Product Service Provider
Senior Note (12% Cash, 2% PIK, Due 08/18)
11,561,375

11,388,555

11,388,555

11,561,375

11,388,555

11,388,555

Frontstreet Facility Solutions, Inc. (1%)*
Retail, Restaurant and Commercial Facilities Maintenance
Subordinated Note (11% Cash, 2% PIK, Due 07/18)
8,462,629

8,368,102

4,200,000

Series A Convertible Preferred Stock (2,500 shares)
250,000

—

8,462,629

8,618,102

4,200,000

Frozen Specialties, Inc. (2%)*
Frozen Foods Manufacturer
Subordinated Note (10% Cash, 4% PIK, Due 05/17)
12,613,686

12,613,686

10,127,000

12,613,686

12,613,686

10,127,000

Garden Fresh Restaurant Holding, LLC (0%)*
Restaurant
Class A Units (5,000 units)
500,000

—

500,000

—


15


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Gilchrist & Soames, Inc. (7%)*
Manufacturer of Personal Care Products
Subordinated Debt (10% Cash, 1.5% PIK, Due 11/19)
$
35,064,167

$
34,539,167

$
34,539,167

35,064,167

34,539,167

34,539,167

GST AutoLeather, Inc. (4%)*
Supplier of Automotive Interior Leather
Subordinated Note (11% Cash, 2% PIK, Due 01/21)
22,213,179

21,794,748

21,794,748

22,213,179

21,794,748

21,794,748

Hatch Chile Co., LLC (1%)*
Food Products Distributor
Subordinated Note (19% Cash, Due 11/18)
2,953,125

2,936,635

2,936,635

Subordinated Note (14% Cash, Due 11/18)
3,234,375

3,043,787

3,043,787

Unit Purchase Warrant (7,817 units)
295,800

506,000

6,187,500

6,276,222

6,486,422

Hickman's Egg Ranch, Inc. (3%)*
Egg Producer
Subordinated Note (12% Cash, Due 06/19)
15,049,229

14,771,894

14,771,894

15,049,229

14,771,894

14,771,894

HKW Capital Partners IV, L.P.
(0%)* (4)
Multi-Sector Holdings
Limited Partnership Interest
705,243

796,000

705,243

796,000

Huron, Inc. (3%)*
Parts Supplier to Automotive Industry
Subordinated Note (10% Cash, 3% PIK, Due 08/18)
13,750,964

13,689,208

13,689,208

13,750,964

13,689,208

13,689,208

Infrastructure Corporation of America, Inc. (3%)*
Roadway Maintenance, Repair and Engineering Services
Subordinated Note (12% Cash, 2% PIK, Due 09/18)
11,421,569
10,184,728
11,422,000
Common Stock Purchase Warrant (487,877 shares)
2,411,000

2,525,000

11,421,569

12,595,728

13,947,000

Inland Pipe Rehabilitation Holding Company LLC (2%)*
Cleaning and Repair Services
Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)
8,604,721

8,470,664

8,470,664

Membership Interest Purchase Warrant (3%)
853,500

760,000

8,604,721

9,324,164

9,230,664

IOS Acquisitions, Inc. (4%)*
Inspections and Repair Services for Oil Industry
Subordinated Note (12% Cash, 3.3% PIK, Due 06/18)
20,205,519

19,931,514

19,931,514

Common Units (7,314 Class A Units)
1,699,847

1,664,000

20,205,519

21,631,361

21,595,514

Justrite Manufacturing Company, LLC (3%)*
Storage Product Developer and Supplier for Hazardous Materials
Subordinated Note (10% Cash, 2% PIK, Due 07/19)
14,777,458

14,591,250

14,591,250

Class A Common Units (1,268 units)
118,110

155,000

Class A Preferred Units (132 units)
131,890

171,000

14,777,458

14,841,250

14,917,250

Library Systems & Services, LLC (0%)*
Municipal Business Services
Common Unit Warrants (112 units)
58,995

2,322,000

58,995

2,322,000

Magpul Industries Corp. (1%)*
Firearm Accessories Manufacturer and Distributor
Preferred Units (1,470 units)
1,470,000

2,297,000

Common Units (30,000 units)
30,000

1,513,000

1,500,000

3,810,000

Media Storm, LLC (1%)*
Marketing Services
Subordinated Note (10% Cash, Due 08/19)
6,545,455

6,474,409

6,474,409

Membership Units (1,216,204 units)
1,176,957

1,465,000

6,545,455

7,651,366

7,939,409

Micross Solutions LLC (4%)*
Provider of Semiconductor Products and Services
Subordinated Note (12% Cash, 3% PIK, Due 06/18)
16,800,137

16,606,535

16,606,535

Class A-2 Common Units (1,979,524 units)
2,019,693

2,019,693

16,800,137

18,626,228

18,626,228

Minco Technology Labs, LLC (1%)*
Semiconductor Distribution
Subordinated Note (6.5% Cash, 3.5% PIK, Due 12/16) (6)
6,342,724

5,484,627

5,000,000

Class A Units (5,000 HoldCo. units)
500,000

—

Class A Units (3,907 OpCo. units)
3,907

—

6,342,724

5,988,534

5,000,000

My Alarm Center, LLC (0%)*
Security Company
Preferred Units (2,000,000 units)
2,000,000

1,886,000

2,000,000

1,886,000

Nautic Partners VII, LP (0%)*
Multi-Sector Holdings
Limited Partnership Interest
243,519

243,519

243,519

243,519


16


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
On Event Services, LLC (2%)*
Equipment Rentals
Subordinated Note (10% Cash, 2% PIK, Due 01/19)
$
9,946,213

$
9,782,913

$
9,782,913

9,946,213

9,782,913

9,782,913

Orchid Underwriters Agency, LLC (5%)*
Insurance Underwriter
Subordinated Note (10% Cash, Due 11/19)
22,942,500

22,495,703

22,495,703

Class A Preferred Units (15,000 units)
1,500,000

1,500,000

Class A Common Units (15,000 units)
—

—

22,942,500

23,995,703

23,995,703

Performance Health & Wellness Holdings, Inc. (2%)*
Rehabilitation and Wellness Products
Subordinated Note (12% Cash, 1% PIK, Due 04/19)
6,735,850

6,592,236

6,648,000

Class A Limited Partnership Units (15,000 units)
1,500,000

3,304,000

6,735,850

8,092,236

9,952,000

PowerDirect Marketing, LLC (1%)*
Marketing Services
Subordinated Note (13% Cash, 2% PIK, Due 12/16) (6)
7,535,807

6,613,149

3,778,000

Common Unit Purchase Warrants
590,200

—

7,535,807

7,203,349

3,778,000

Sheplers, Inc. (2%)*
Western Apparel Retailer
Subordinated Note (13.2% Cash, Due 12/16)
8,750,000

8,645,362

8,645,362

Subordinated Note (10% Cash, 7% PIK, Due 12/17)
4,625,067

4,590,571

4,590,571

13,375,067

13,235,933

13,235,933

SPC Partners V, LP (0%)* (4)
Multi-Sector Holdings
0.7% Limited Partnership Interest
725,083

725,083

725,083

725,083

Specialized Desanders, Inc. (4%)* (4)
Sand and Particulate Removal Equipment Provider for Oil and Gas Companies
Subordinated Note (12% Cash, 2% PIK, Due 03/20)
16,110,043

15,874,586

14,384,427

Class C Capital Units (2,000,000 units)
1,937,421

5,131,000

16,110,043

17,812,007

19,515,427

Stella Environmental Services, LLC (0%)*
Waste Transfer Stations
Common Stock Purchase Warrants (2,500 shares)
20,000

1,787,000

20,000

1,787,000

TACH Holdings, Inc. (f/k/a Trinity Consultants Holdings, Inc.) (3%)*
Air Quality Consulting Services
Subordinated Note (10% Cash, 3% PIK, Due 08/20)
15,174,201

15,050,945

15,050,945

Series A1 Preferred Stock (10,000 units)
—

104,000

Common Stock (50,000 units)
50,000

932,000

15,174,201

15,100,945

16,086,945

Tate's Bake Shop (2%)*
Producer of Baked Goods
Subordinated Note (10% Cash, 3% PIK, Due 02/20)
10,105,217

9,912,146

9,912,146

Limited Partner Interest
999,000

1,129,000

10,105,217

10,911,146

11,041,146

TCFI Merlin LLC (3%)*
Specialty Staffing Service Provider
Senior Note (10% Cash, 1% PIK, Due 09/19)
15,042,126

14,753,871

14,753,871

Limited Partnership Units (500,000 units)
500,000

500,000

15,042,126

15,253,871

15,253,871

The Cook & Boardman Group, LLC (3%)*
Distributor of Doors and Related Products
Subordinated Note (10% Cash, 2.5% PIK, Due 03/20)
14,108,034

13,837,735

13,837,735

Class A Units (1,400,000 units)
1,400,000

1,400,000

14,108,034

15,237,735

15,237,735

The Krystal Company (1%)*
Restaurant
Class A Units of Limited Partnership (2,000 units)
638,260

2,928,000

638,260

2,928,000

Top Knobs USA, Inc. (0%)*
Hardware Designer and Distributor
Common Stock (26,593 shares)
333,994

1,395,000

333,994

1,395,000

United Biologics, LLC (3%)*
Allergy Immunotherapy
Subordinated Note (12% Cash, 2% PIK, Due 03/17)
12,870,825

12,288,416

12,288,416

Class A Common Stock (177,935 shares)
1,999,989

861,000

Class A-1 Common Stock (18,818 shares)
137,324

137,000

Class A-1 Common Kicker Stock (14,114 shares)
—

—

Class A, Class A-1, Class A-1 Kicker & Class B Unit Purchase Warrants
838,117

202,000

12,870,825

15,263,846

13,488,416


17


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
United Retirement Plan Consultants, Inc. (0%)*
Retirement Plan Administrator
Preferred A Shares (90,000 shares)
$
900,000

$
1,215,000

Common Shares (10,000 shares)
100,000

—

1,000,000

1,215,000

Water Pik, Inc. (2%)*
Oral Health and Shower Head Supplier
Second Lien Term Loan (9.8% Cash, Due 01/21)
$
8,315,789

8,014,819

8,014,819

8,315,789

8,014,819

8,014,819

Wheel Pros Holdings, Inc. (2%)*
Wheel/Rim and Performance Tire Distributor
Subordinated Note (11% Cash, Due 06/20)
9,500,000

9,299,238

9,299,238

Class A Units (2,000 units)
2,000,000

2,303,000

9,500,000

11,299,238

11,602,238

WSO Holdings, LP (0%)*
Organic/Fair Trade Sugar, Syrup, Nectar and Honey Producer
Common Points (3,000 points)
3,000,000

2,084,000

3,000,000

2,084,000

Yellowstone Landscape Group, Inc. (4%)*
Landscaping Services
Subordinated Note (10% Cash, 2.5% PIK, Due 02/19)
20,377,350

20,431,075

20,577,000

20,377,350

20,431,075

20,577,000

Subtotal Non–Control / Non–Affiliate Investments
678,546,053

717,233,688

693,312,886

Affiliate Investments:
All Aboard America! Holdings Inc. (3%)*
Motor Coach Operator
Subordinated Note (12% Cash, 3% PIK, Due 12/17)
14,633,379

14,442,239

14,442,239

Membership Units in LLC
2,185,492

2,207,492

14,633,379

16,627,731

16,649,731

American De-Rosa Lamparts, LLC and Hallmark Lighting, LLC (2%)*
Lighting Wholesale and Distribution
Subordinated Note (12% Cash, 2% PIK, Due 06/16)
7,084,969

7,069,614

7,069,614

Membership Units (8,364 units)
620,653

936,000

7,084,969

7,690,267

8,005,614

AP Services, Inc. (0%)*
Fluid Sealing Supplies and Services
Class A Units (933 units)
1,486

2,394

Class B Units (496 units)
—

1,272

1,486

3,666

Asset Point, LLC (2%)*
Asset Management Software Provider
Senior Note (11.3% Cash, 4.8% PIK, Due 03/15)
7,990,174

7,990,172

7,990,172

Subordinated Note (12% Cash, 2% PIK, Due 07/15)
656,310

656,310

656,310

Membership Units (1,000,000 units)
8,203

—

Options to Purchase Membership Units (342,407 units)
500,000

204,000

Membership Unit Warrants (356,506 units)
—

—

8,646,484

9,154,685

8,850,482

Captek Softgel International, Inc.
(3%)*
Nutraceutical Manufacturer
Subordinated Note (9.5% Cash, Due 02/20)
16,872,635

16,715,906

16,715,906

Class A Units (80,000 units)
737,468

1,719,000

16,872,635

17,453,374

18,434,906

CIS Secure Computing Inc. (2%)*
Secure Communications and Computing Solutions Provider
Subordinated Note (12% Cash, 4% PIK, Due 06/17)
10,889,763

10,813,037

10,035,000

Common Stock (84 shares)
502,320

40,000

10,889,763

11,315,357

10,075,000

DPII Holdings, LLC (1%)*
Satellite Communication Business
Senior Note (12% Cash, 4% PIK, Due 07/17)
3,453,055

3,394,913

3,394,913

Class A Membership Interest (17,308 units)
1,107,692

1,107,692

3,453,055

4,502,605

4,502,605

Dyson Corporation (0%)*
Custom Forging and Fastener Supplies
Common Units (1,000,000 units)
1,000,000

324,000

1,000,000

324,000

Frank Entertainment Group, LLC
(3%)*
Movie Theatre and Family Entertainment Operator
Senior Note (10% Cash, 5.8% PIK, Due 06/18)
8,633,927

8,513,033

8,513,033

Class A Redeemable Preferred Units (10.5% Cash) (189,744 units)
3,772,762

4,405,000

Class B Redeemable Preferred Units (13,333 units)
309,524

1,537,000

Class A Common Units (43,077 units)
1,000,000

—

Class A Common Warrants
632,000

—

8,633,927

14,227,319

14,455,033


18


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
Halcyon Healthcare, LLC (3%)*
Provider of Hospice Services
Subordinated Note (11% Cash, Due 10/19)
$
11,500,000

$
11,278,779

$
11,278,779

Preferred Interests (2,000,000 interests)
2,000,000

2,000,000

11,500,000

13,278,779

13,278,779

Main Street Gourmet, LLC (1%)*
Baked Goods Provider
Jr. Subordinated Notes (8% Cash, 2% PIK, Due 04/17)
762,829

754,197

754,197

Preferred Units (233 units)
211,867

333,000

Common B Units (3,000 units)
23,140

1,108,000

Common A Units (1,652 units)
14,993

610,000

762,829

1,004,197

2,805,197

PCX Aerostructures, LLC (5%)*
Aerospace Component Manufacturer
Subordinated Note (11% Cash, 3% PIK, Due 04/19)
19,425,333

19,087,302

19,087,302

Series A Preferred Stock (5,344 shares)
5,343,953

5,343,953

Class A Common Stock (107,416 shares)
26,854

26,854

19,425,333

24,458,109

24,458,109

Playhaven, LLC (4%)*
Mobile Game Advertising Network
Senior Note (9.5% Cash, 2.5% PIK, Due 09/19)
21,918,134

20,712,285

20,712,285

Class A Common Units (999,999 units)
869,999

869,999

Class C Common Units (1 unit)
5,001

5,001

21,918,134

21,587,285

21,587,285

QC Holdings, Inc. (0%)*
Lab Testing Services
Common Stock (5,594 shares)
563,602

470,000

563,602

470,000

Technology Crops, LLC (2%)*
Supply Chain Management Services
Subordinated Note (12% Cash, 5% PIK, Due 03/18)
10,697,064

10,670,076

10,670,076

Common Units (50 units)
500,000

162,000

10,697,064

11,170,076

10,832,076

TGaS Advisors, LLC (2%)*
Advisory Solutions to Pharmaceutical Companies
Senior Note (10% Cash, 1% PIK, Due 11/19)
9,972,212

9,742,396

9,742,396

Preferred Units (1,685,357 units)
1,685,357

1,685,357

9,972,212

11,427,753

11,427,753

UCS Super HoldCo LLC (1%)*
Squid and Wetfish Processor and Distributor
Membership Units (1,000 units)
1,000,000

1,000,000

Participation Interest
2,000,000

2,000,000

3,000,000

3,000,000

Venture Technology Groups, Inc.
(0%)*
Fluid and Gas Handling Products Distributor
Subordinated Note (12.5% Cash, 4% PIK, Due 09/16) (6)
320,365

234,545

225,000

320,365

234,545

225,000

Waste Recyclers Holdings, LLC (0%)*
Environmental and Facilities Services
Class A Preferred Units (280 units)
2,251,100

—

Class B Preferred Units (11,484,867 units)
3,304,218

1,727,000

Common Unit Purchase Warrant (1,170,083 units)
748,900

—

Common Units (153,219 units)
180,783

—

6,485,001

1,727,000

Wythe Will Tzetzo, LLC (1%)*
Confectionery Goods Distributor
Series A Preferred Units (99,829 units)
—

7,823,000

—

7,823,000

Subtotal Affiliate Investments
144,810,149

175,182,171

178,935,236

Control Investments:
Gerli & Company (0%)*
Specialty Woven Fabrics Manufacturer
Subordinated Note (13% Cash, Due 07/15) (6)
500,193

375,000

375,000

Subordinated Note (8.5% Cash, Due 07/15) (6)
4,131,520

3,000,000

543,000

Class A Preferred Shares (1,211 shares)
855,000

—

Class C Preferred Shares (744 shares)
—

—

Class E Preferred Shares (400 shares)
161,440

—

Common Stock (300 shares)
100,000

—

4,631,713

4,491,440

918,000


19


TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2014
Portfolio Company
Industry
Type of Investment (1)(2)(7)
Principal
Amount
Cost
Fair
Value (3)
PartsNow!, LLC (1%)*
Printer Parts Distributor
Subordinated Note (12% Cash, 3% PIK, Due 08/17) (6)
$
12,545,858

$
11,487,784

$
6,233,000

Preferred Membership Units (4,000,000 units)
4,000,000

—

Common Member Units (1,500,000 units)
1,429,539

—

Royalty Rights
—

—

12,545,858

16,917,323

6,233,000

SRC Worldwide, Inc. (1%)*
Specialty Chemical Manufacturer
Common Stock (5,000 shares)
8,228,000

7,824,000

8,228,000

7,824,000

Subtotal Control Investments
17,177,571

29,636,763

14,975,000

Total Investments, December 31, 2014 (167%)*
$
840,533,773

$
922,052,622

$
887,223,122


*    Fair value as a percent of net assets
(1)
All debt investments are income producing, unless otherwise noted. Equity and equity-linked investments are non-income producing, unless otherwise noted.
(2)
Disclosures of interest rates on notes include cash interest rates and payment-in-kind (“PIK”) interest rates.
(3)
All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors.
(4)
Investment is not a qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. If at any time qualifying assets do not represent at least 70% of the Company's total assets, the Company will be precluded from acquiring any additional non-qualifying asset until such time as it complies with the requirements of Section 55(a).
(5)
PIK non-accrual investment
(6)
Non-accrual investment
(7)
All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's senior secured credit facility or in support of the SBA-guaranteed debentures issued by Triangle Mezzanine Fund LLLP and Triangle Mezzanine Fund II LP.

See accompanying notes.


20


TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements

1. ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
Organization and Business
Triangle Capital Corporation and its wholly owned subsidiaries, including Triangle Mezzanine Fund LLLP (“Triangle SBIC”) and Triangle Mezzanine Fund II LP (“Triangle SBIC II”) (collectively, the “Company”), are specialty finance companies. Triangle SBIC and Triangle SBIC II are specialty finance limited partnerships formed to make investments primarily in lower middle market companies located throughout the United States. On September 11, 2003, Triangle SBIC was licensed to operate as a Small Business Investment Company (“SBIC”) under the authority of the United States Small Business Administration (“SBA”). On May 26, 2010, Triangle SBIC II obtained its license to operate as an SBIC. As SBICs, both Triangle SBIC and Triangle SBIC II are subject to a variety of regulations concerning, among other things, the size and nature of the companies in which they may invest and the structure of those investments.
The Company currently operates as a closed-end, non-diversified investment company and has elected to be treated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"). The Company is internally managed by its executive officers under the supervision of its Board of Directors. The Company does not pay management or advisory fees, but instead incurs the operating costs associated with employing executive management and investment and portfolio management professionals. Triangle SBIC has also elected to be treated as a BDC under the 1940 Act.
Basis of Presentation
The financial statements of the Company include the accounts of Triangle Capital Corporation and its wholly-owned subsidiaries, including Triangle SBIC and Triangle SBIC II. The effects of all intercompany transactions between Triangle Capital Corporation and its subsidiaries have been eliminated in consolidation. Under the investment company rules and regulations pursuant to Article 6 of Regulation S-X and FASB Accounting Standards Codification Topic 946, Financial Services - Investment Companies , the Company is precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolio company is another investment company. An exception to this general principle occurs if the Company holds a controlling interest in an operating company that provides all or substantially all of its services directly to the Company or to its portfolio companies. None of the portfolio investments made by the Company qualify for this exception. Therefore, the Company's investment portfolio is carried on the Consolidated Balance Sheets at fair value, as discussed further in Note 2, with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” on the Unaudited Consolidated Statements of Operations.
The accompanying unaudited financial statements are presented in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial statements for the interim period, have been reflected in the unaudited consolidated financial statements. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Additionally, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 . Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
Recently Issued Accounting Standards
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company elected early adoption of this standard on January 1, 2015. As a result, deferred financing fees related to the Company's outstanding notes and SBA-guaranteed debentures payable are no longer presented as an asset on the Company’s Consolidated Balance Sheets but are included as a reduction in the carrying amount of the debt securities. Debt issuance costs related to the Company's senior secured credit facility will continue to be presented as an asset on the Company’s Consolidated Balance Sheets. ASU 2015-03 is effective for interim and annual periods beginning

21

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


after December 15, 2015. In addition, the Company’s Consolidated Balance Sheet as of December 31, 2014 has been adjusted to reflect the effects of adoption of ASU 2015-03 on a retrospective basis.
2. INVESTMENTS
Portfolio Composition
The Company primarily invests in subordinated debt securities of privately held companies, generally secured by second lien security interests in portfolio company assets. In addition, the Company generally invests in an equity instrument of the borrower, such as warrants to purchase common stock in the portfolio company or direct preferred or common equity interests. On a more limited basis, the Company also invests in senior debt securities secured by first lien security interests in portfolio companies. The Company's investments generally range from $5.0 million to $35.0 million per portfolio company.
The cost basis of the Company's debt investments includes any unamortized original issue discount, unamortized loan origination fees and payment-in-kind (“PIK”) interest, if any. Summaries of the composition of the Company’s investment portfolio at cost and fair value, and as a percentage of total investments, are shown in the following tables:
Cost
Percentage of
Total Portfolio
Fair Value
Percentage of
Total Portfolio
June 30, 2015:
Subordinated debt and 2 nd lien notes
$
701,900,002

76
%
$
669,517,627

76
%
Senior debt and 1 st lien notes
92,229,433

10

90,887,433

10

Equity shares
117,562,497

13

120,812,430

14

Equity warrants
6,215,918

1

3,681,000

—

Royalty rights
—

—

—

—

$
917,907,850

100
%
$
884,898,490

100
%
December 31, 2014:
Subordinated debt and 2 nd lien notes
$
703,800,176

76
%
$
660,377,024

74
%
Senior debt and 1 st lien notes
116,654,301

13

115,252,247

13

Equity shares
92,384,676

10

103,132,851

12

Equity warrants
9,213,469

1

8,461,000

1

Royalty rights
—

—

—

—

$
922,052,622

100
%
$
887,223,122

100
%

During the three months ended June 30, 2015 , the Company made four new investments totaling approximately $49.9 million and investments in nine existing portfolio companies totaling approximately $15.2 million. During the six months ended June 30, 2015 , the Company made seven new investments totaling approximately $129.3 million and investments in twelve existing portfolio companies totaling approximately $33.9 million.
During the three months ended June 30, 2014 , the Company made five new investments totaling approximately $61.3 million and investments in five existing portfolio companies totaling approximately $26.0 million. During the six months ended June 30, 2014 , the Company made eleven new investments totaling approximately $139.1 million and investments in ten existing portfolio companies totaling approximately $25.8 million.
Investment Valuation Process
The Company has established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring basis in accordance with the 1940 Act and FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). Under ASC Topic 820, a financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. The three levels of valuation inputs established by ASC Topic 820 are as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

22

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
The Company’s investment portfolio is comprised of debt and equity instruments of privately held companies for which quoted prices or other inputs falling within the categories of Level 1 and Level 2 are not available. Therefore, the Company determines the fair value of its investments in good faith using Level 3 inputs, pursuant to a valuation policy and process that is established by the management of the Company with the assistance of certain third-party advisors and subsequently approved by the Company’s Board of Directors. There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of the Company’s investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
The Company’s valuation process is led by the Company’s executive officers and managing directors. The Company’s valuation process begins with a quarterly review of each investment in the Company’s investment portfolio by the Company’s executive officers and investment committee. Valuations of each portfolio security are then prepared by the Company’s investment professionals, who have direct responsibility for the origination, management and monitoring of each investment. Under the Company’s valuation policy, each investment valuation is subject to (i) a review by the lead investment officer responsible for the portfolio company investment and (ii) a peer review by a second investment officer or executive officer of the Company. Generally, any investment that is valued below cost is subjected to review by one of the Company’s executive officers. After the peer review is complete, the Company engages two independent valuation firms, including Duff & Phelps, LLC (collectively, the “Valuation Firms”), to provide third-party reviews of certain investments, as described further below. Finally, the Board of Directors has the responsibility for reviewing and approving, in good faith, the fair value of the Company’s investments in accordance with the 1940 Act.
The Valuation Firms provide third party valuation consulting services to the Company which consist of certain procedures that the Company identified and requested the Valuation Firms to perform (hereinafter referred to as the “Procedures”). The Procedures are performed with respect to each portfolio company at least once in every calendar year and for new portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In addition, the Procedures are generally performed with respect to a portfolio company when there has been a significant change in the fair value of the investment. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in the Company’s stockholders’ best interest, to request the Valuation Firms to perform the Procedures on one or more portfolio companies. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio.
The total number of investments and the percentage of the investment portfolio on which the Procedures were performed are summarized below by period:
For the quarter ended:
Total
companies
Percent of total
investments at
fair value (1)
March 31, 2014
15
25%
June 30, 2014
15
31%
September 30, 2014
18
29%
December 31, 2014
16
24%
March 31, 2015
16
28%
June 30, 2015
15
26%

(1)
Exclusive of the fair value of new investments made during the quarter.
Upon completion of the Procedures, the Valuation Firms concluded that, with respect to each investment reviewed by each Valuation Firm, the fair value of those investments subjected to the Procedures appeared reasonable. The Company’s Board of Directors is ultimately responsible for determining the fair value of the Company’s investments in good faith.
Investment Valuation Inputs
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For the Company’s portfolio

23

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


securities, fair value is generally the amount that the Company might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if the Company does not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market. The securities in which the Company invests are generally only purchased and sold in merger and acquisition transactions, in which case the entire portfolio company is sold to a third-party purchaser. As a result, unless the Company has the ability to control such a transaction, the assumed principal market for the Company’s securities is a hypothetical secondary market. The Level 3 inputs to the Company’s valuation process reflect the Company’s best estimate of the assumptions that would be used by market participants in pricing the investment in a transaction in a hypothetical secondary market.
Enterprise Value Waterfall Approach
In valuing equity securities (including warrants), the Company estimates fair value using an “Enterprise Value Waterfall” valuation model. The Company estimates the enterprise value of a portfolio company and then allocates the enterprise value to the portfolio company’s securities in order of their relative liquidation preference. In addition, the Company assumes that any outstanding debt or other securities that are senior to the Company’s equity securities are required to be repaid at par. Additionally, the Company estimates the fair value of a limited number of its debt securities using the Enterprise Value Waterfall approach in cases where the Company does not expect to receive full repayment.
To estimate the enterprise value of the portfolio company, the Company primarily uses a valuation model based on a transaction multiple, which generally is the original transaction multiple, and measures of the portfolio company’s financial performance, which generally is either earnings before interest, taxes, depreciation and amortization, as adjusted (“Adjusted EBITDA”) or revenues. In addition, the Company considers other factors, including but not limited to (i) offers from third-parties to purchase the portfolio company, (ii) the implied value of recent investments in the equity securities of the portfolio company, (iii) publicly available information regarding recent sales of private companies in comparable transactions and (iv) when the Company believes there are comparable companies that are publicly traded, the Company performs a review of these publicly traded companies and the market multiple of their equity securities. For certain non-performing assets, the Company may utilize the liquidation or collateral value of the portfolio company's assets in its estimation of enterprise value.
The significant Level 3 inputs to the Enterprise Value Waterfall model are (i) an appropriate transaction multiple and (ii) a measure of the portfolio company’s financial performance, which generally is either Adjusted EBITDA or revenues. Such inputs can be based on historical operating results, projections of future operating results or a combination thereof. The operating results of a portfolio company may be unaudited, projected or pro forma financial information and may require adjustments for certain non-recurring items. In determining the operating results input, the Company utilizes the most recent portfolio company financial statements and forecasts available as of the valuation date. The Company also consults with the portfolio company’s senior management to obtain updates on the portfolio company’s performance, including information such as industry trends, new product development, loss of customers and other operational issues. Fair value measurements using the Enterprise Value Waterfall model can be sensitive to significant changes in one or more of the inputs. A significant increase (decrease) in either the transaction multiple, Adjusted EBITDA or revenues for a particular equity security would result in a higher (lower) fair value for that security.
Income Approach
In valuing debt securities, the Company utilizes an “Income Approach” model that considers factors including, but not limited to, (i) the stated yield on the debt security, (ii) the portfolio company’s current Adjusted EBITDA as compared to the portfolio company’s historical or projected Adjusted EBITDA as of the date the investment was made and the portfolio company’s anticipated Adjusted EBITDA for the next twelve months of operations, (iii) the portfolio company’s current Leverage Ratio (defined as the portfolio company’s total indebtedness divided by Adjusted EBITDA) as compared to its Leverage Ratio as of the date the investment was made, (iv) publicly available information regarding current pricing and credit metrics for similar proposed and executed investment transactions of private companies and (v) when the Company believes a relevant comparison exists, current pricing and credit metrics for similar proposed and executed investment transactions of publicly traded debt. In addition, the Company uses a risk rating system to estimate the probability of default on the debt securities and the probability of loss if there is a default. This risk rating system covers both qualitative and quantitative aspects of the business and the securities held.
The Company considers the factors above, particularly any significant changes in the portfolio company’s results of operations and leverage, and develops an expectation of the yield that a hypothetical market participant would require when

24

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


purchasing the debt investment (the “Required Rate of Return”). The Required Rate of Return, along with the Leverage Ratio and Adjusted EBITDA, are the significant Level 3 inputs to the Income Approach model. For investments where the Leverage Ratio and Adjusted EBITDA have not fluctuated significantly from the date the investment was made or have not fluctuated significantly from the Company’s expectations as of the date the investment was made, and where there have been no significant fluctuations in the market pricing for such investments, the Company may conclude that the Required Rate of Return is equal to the stated rate on the investment and therefore, the debt security is appropriately priced. In instances where the Company determines that the Required Rate of Return is different from the stated rate on the investment, the Company discounts the contractual cash flows on the debt instrument using the Required Rate of Return in order to estimate the fair value of the debt security.
Fair value measurements using the Income Approach model can be sensitive to significant changes in one or more of the inputs. A significant increase (decrease) in the Required Rate of Return or Leverage Ratio inputs for a particular debt security may result in a lower (higher) fair value for that security. A significant increase (decrease) in the Adjusted EBITDA input for a particular debt security may result in a higher (lower) fair value for that security.
The fair value of the Company’s royalty rights are calculated based on specific provisions contained in the pertinent operating or royalty agreements. The determination of the fair value of such royalty rights is not a significant component of the Company’s valuation process.
The ranges and weighted average values of the significant Level 3 inputs used in the valuation of the Company’s debt and equity securities at June 30, 2015 and December 31, 2014 are summarized as follows:
June 30, 2015:
Fair Value(1)
Valuation
Model
Level 3
Inputs
Range of
Inputs
Weighted
Average
Subordinated debt and 2nd lien notes
$
621,978,906

Income
Approach
Required Rate of Return
8.3% – 30.0%
13.5%
Leverage Ratio
1.4x – 9.2x
4.1x
Adjusted EBITDA
$1.2 million – $77.3 million
$18.8 million
Subordinated debt and 2nd lien notes
31,137,000

Enterprise
Value Waterfall
Approach
Adjusted EBITDA Multiple
5.0x – 7.6x
5.7x
Adjusted EBITDA
$1.0 million – $10.3 million
$4.0 million
Senior debt and 1 st lien notes
90,887,433

Income
Approach
Required Rate of Return
3.7% – 16.0%
11.7%
Leverage Ratio
0.0x – 7.1x
3.1x
Adjusted EBITDA
$1.2 million – $8.0 million
$5.1 million
Equity shares and warrants
124,493,430

Enterprise
Value Waterfall
Approach
Adjusted EBITDA Multiple
4.1x – 15.0x
6.9x
Adjusted EBITDA
$1.0 million – $77.3 million
$13.0 million
Revenue Multiple
1.3x – 4.0x
3.4x
Revenues
$9.8 million – $81.0 million
$66.6 million
(1)
Certain investments with a total fair value of $16,401,721 were repaid or redeemed subsequent to the end of the reporting period and were valued at their transaction price.


25

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


December 31, 2014:
Fair Value(1)
Valuation
Model
Level 3
Input
Range of
Inputs
Weighted
Average
Subordinated debt and 2nd lien notes
$
599,378,024

Income
Approach
Required Rate of Return
8.3% – 30.0%
14.0%
Leverage Ratio
1.3x – 8.1x
4.2x
Adjusted EBITDA
$1.5 million – $74.8 million
$18.3 million
Subordinated debt and 2nd lien notes
29,000,000

Enterprise
Value Waterfall
Approach
Adjusted EBITDA Multiple
3.5x – 6.0x
5.4x
Adjusted EBITDA
$1.0 million –$7.5 million
$4.6 million
Senior debt and 1st lien notes
115,252,247

Income
Approach
Required Rate of Return
3.7% – 16.0%
12.1%
Leverage Ratio
0.0x – 9.0x
3.2x
Adjusted EBITDA
$1.5 million – $8.1 million
$5.4 million
Equity shares and warrants
106,746,851

Enterprise
Value Waterfall
Approach
Adjusted EBITDA Multiple
3.0x – 14.9x
6.6x
Adjusted EBITDA
$1.0 million – $74.8 million
$12.1 million
Revenue Multiple
1.3x – 4.0x
3.4x
Revenues
$9.6 million – $76.2 million
$62.7 million
(1)
Certain investments with a total fair value of $36,846,000 were repaid or redeemed subsequent to the end of the reporting period and were valued at their transaction price.

The following table presents the Company’s investment portfolio at fair value as of June 30, 2015 and December 31, 2014 , categorized by the ASC Topic 820 valuation hierarchy, as previously described:
Fair Value as of June 30, 2015
Level 1
Level 2
Level 3
Total
Subordinated debt and 2 nd lien notes
$
—

$
—

$
669,517,627

$
669,517,627

Senior debt and 1 st lien notes
—

—

90,887,433

90,887,433

Equity shares
—

—

120,812,430

120,812,430

Equity warrants
—

—

3,681,000

3,681,000

Royalty rights
—

—

—

—

$
—

$
—

$
884,898,490

$
884,898,490

Fair Value as of December 31, 2014
Level 1
Level 2
Level 3
Total
Subordinated debt and 2 nd lien notes
$
—

$
—

$
660,377,024

$
660,377,024

Senior debt and 1 st lien notes
—

—

115,252,247

115,252,247

Equity shares
—

—

103,132,851

103,132,851

Equity warrants
—

—

8,461,000

8,461,000

Royalty rights
—

—

—

—

$
—

$
—

$
887,223,122

$
887,223,122


The following tables reconcile the beginning and ending balances of the Company’s investment portfolio measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015 and 2014 :

26

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


Six Months Ended
June 30, 2015:
Subordinated
Debt and 2 nd
Lien Notes
Senior Debt
and 1 st Lien
Notes
Equity
Shares
Equity
Warrants
Royalty
Rights
Total
Fair value, beginning of period
$
660,377,024

$
115,252,247

$
103,132,851

$
8,461,000

$
—

$
887,223,122

New investments
133,503,814

7,446,253

21,068,498

1,252,000

—

163,270,565

Reclassifications
(8,707,740
)
—

8,707,740

—

—

—

Proceeds from sales of investments
—

—

(4,901,207
)
(6,992,088
)
—

(11,893,295
)
Loan origination fees received
(2,819,164
)
—

—

—

—

(2,819,164
)
Principal repayments received
(109,212,658
)
(33,105,582
)
—

—

—

(142,318,240
)
PIK interest earned
6,731,749

929,111

—

—

—

7,660,860

PIK interest payments received
(6,478,328
)
(1,206,033
)
—

—

—

(7,684,361
)
Accretion of loan discounts
202,718

35,511

—

—

—

238,229

Accretion of deferred loan origination revenue
2,531,596

671,072

—

—

—

3,202,668

Realized gain (loss)
(17,652,163
)
804,802

302,790

2,742,537

—

(13,802,034
)
Unrealized gain (loss)
11,040,779

60,052

(7,498,242
)
(1,782,449
)
—

1,820,140

Fair value, end of period
$
669,517,627

$
90,887,433

$
120,812,430

$
3,681,000

$
—

$
884,898,490


Six Months Ended
June 30, 2014:
Subordinated
Debt and 2 nd
Lien Notes
Senior Debt
and 1 st Lien
Notes
Equity
Shares
Equity
Warrants
Royalty
Rights
Total
Fair value, beginning of period
$
514,467,575

$
45,968,765

$
79,935,246

$
23,928,603

$
73,000

$
664,373,189

New investments
137,230,617

10,200,175

16,777,550

632,000

—

164,840,342

Reclassifications
(3,964,597
)
(5,963,403
)
11,715,000

(1,787,000
)
—

—

Proceeds from sales of investments
—

—

(5,800,481
)
(11,020,560
)
—

(16,821,041
)
Loan origination fees received
(2,625,648
)
(212,778
)
—

—

—

(2,838,426
)
Principal repayments received
(88,089,399
)
(116,058
)
—

—

—

(88,205,457
)
PIK interest earned
7,369,836

511,468

—

—

—

7,881,304

PIK interest payments received
(5,267,116
)
—

—

—

—

(5,267,116
)
Accretion of loan discounts
644,575

—

—

—

—

644,575

Accretion of deferred loan origination revenue
1,722,418

61,185

—

—

—

1,783,603

Realized gains
126,617

—

2,055,808

9,571,750

—

11,754,175

Unrealized gain (loss)
269,176

3,929

9,107,693

(11,175,793
)
(73,000
)
(1,867,995
)
Fair value, end of period
$
561,884,054

$
50,453,283

$
113,790,816

$
10,149,000

$
—

$
736,277,153


All realized and unrealized gains and losses are included in earnings (changes in net assets) and are reported on separate line items within the Company’s Unaudited Consolidated Statements of Operations. Pre-tax net unrealized losses on investments of $2.1 million and $9.6 million , respectively, during the three and six months ended June 30, 2015 were related to portfolio company investments that were still held by the Company as of June 30, 2015 . Pre-tax net unrealized gains on investments of $11.1 million and $9.4 million, respectively, during the three and six months ended June 30, 2014 were related to portfolio company investments that were still held by the Company as of June 30, 2014 .
The Company’s primary investment objective is to generate current income and capital appreciation by investing directly in privately-held lower middle market companies to help these companies fund acquisitions, growth or refinancing. During the six months ended June 30, 2015 , the Company made investments of approximately $159.3 million in portfolio companies to

27

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


which it was not previously contractually committed to provide the financial support. During the six months ended June 30, 2015 , the Company made investments of $4.0 million in companies to which it was previously committed to provide the financial support. During the six months ended June 30, 2014 , the Company made investments of approximately $25.8 million in portfolio companies to which it was not previously contractually committed to provide the financial support. During the six months ended June 30, 2014 , the Company made investments in $0.6 million in companies to which it was previously committed to provide the financial support. The details of the Company’s investments have been disclosed on the Consolidated Schedules of Investments.
Warrants
When originating a debt security, the Company will sometimes receive warrants or other equity-related securities from the borrower. The Company determines the cost basis of the warrants or other equity-related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity-related securities received. Any resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the warrant or other equity instruments is treated as original issue discount and accreted into interest income over the life of the loan.
Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments
Realized gains or losses are recorded upon the sale or liquidation of investments and are calculated as the difference between the net proceeds from the sale or liquidation, if any, and the cost basis of the investment using the specific identification method. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.
Investment Classification
In accordance with the provisions of the 1940 Act, the Company classifies investments by level of control. As defined in the 1940 Act, “Control Investments” are investments in those companies that the Company is deemed to “Control.” “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, other than Control Investments. “Non-Control / Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. Generally, under the 1940 Act, the Company is deemed to control a company in which it has invested if the Company owns more than 25.0% of the voting securities of such company, has greater than 50.0% representation on its board or has the power to exercise control over management or policies of such portfolio company. The Company is deemed to be an affiliate of a company in which the Company has invested if it owns between 5.0% and 25.0% of the voting securities of such company.
Investment Income
Interest income, adjusted for amortization of premium and accretion of original issue discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes, until all principal and interest has been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date.
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with loan agreements ("Loan Origination Fees") are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of its business, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, certain investment banking and structuring fees and loan waiver and amendment fees, and are recorded as investment income when earned.

28

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


Payment-in-Kind Interest
The Company currently holds, and expects to hold in the future, some loans in its portfolio that contain a payment-in-kind ("PIK") interest provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income at the time of recognition, is included in the Company’s taxable income and therefore affects the amount the Company is required to distribute to its stockholders to maintain its qualification as a regulated investment company ("RIC") for federal income tax purposes, even though the Company has not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The Company writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
Concentration of Credit Risk
The Company’s investments are generally in lower middle market companies in a variety of industries. As of both June 30, 2015 and December 31, 2014 , there were no individual investments greater than 10% of the fair value of the Company’s portfolio. As of both June 30, 2015 and December 31, 2014 , the Company’s largest single portfolio company investment represented approximately 3.9% of the fair value of the Company’s portfolio. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses on equity interests, can fluctuate dramatically upon repayment of an investment or sale of an equity interest and in any given year can be highly concentrated among several portfolio companies.
The Company’s investments carry a number of risks including, but not limited to: (i) investing in lower middle market companies which may have limited financial resources and may have limited operating histories, (ii) investing in senior subordinated debt which ranks equal to or lower than debt held by other investors and (iii) holding investments that are not publicly traded and are subject to legal and other restrictions on resale and other risks common to investing in below investment grade debt and equity instruments.
As of June 30, 2015 , $662.7 million of the Company's assets were pledged as collateral for the Company's third amended and restated senior secured credit facility (the “Credit Facility”) and $351.0 million were subject to superior claim over the Company's shareholders by the SBA. If the Company defaults on its obligations under the Credit Facility or its SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claims.

Investments Denominated in Foreign Currency
As of both June 30, 2015 and December 31, 2014 , the Company held investments in one portfolio company that were denominated in Canadian dollars.
At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into United States dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into United States dollars using the rates of exchange prevailing on the respective dates of such transactions.
Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into United States dollars using the applicable foreign exchange rates described above, the Company does not isolate that portion of the change in fair values resulting from foreign currency exchange rates fluctuations from the change in fair values of the underlying investment. All fluctuations in fair value are included in net unrealized appreciation (depreciation) of investments in the Company's Unaudited Consolidated Statements of Operations.
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the United States dollar.

29

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


3. INCOME TAXES
The Company elected for federal income tax purposes to be treated as a RIC under the Internal Revenue Code of 1986, as amended (the "Code") commencing with its taxable year ended December 31, 2007. In order to maintain its qualification as a RIC, the Company must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then the Company is generally required to pay income taxes only on the portion of its taxable income and gains it does not distribute (actually or constructively) and certain built-in gains. The Company has historically met its minimum distribution requirements and continually monitors its distribution requirements with the goal of ensuring compliance with the Code.
The minimum distribution requirements applicable to RICs require the Company to distribute to its stockholders at least 90% of its investment company taxable income (“ICTI”), as defined by the Code, each year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year distributions into the next tax year and pay a 4% excise tax on such excess. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash. For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in ICTI other amounts that it has not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
The Company has certain wholly-owned taxable subsidiaries (the “Taxable Subsidiaries”), each of which holds one or more of its portfolio investments that are listed on the Consolidated Schedule of Investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Company’s consolidated financial statements reflect the Company’s investments in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold certain portfolio companies that are organized as limited liability companies (“LLCs”) (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of the RIC’s gross revenue for income tax purposes must consist of investment income. Absent the Taxable Subsidiaries, a proportionate amount of any gross income of an LLC (or other pass-through entity) portfolio investment would flow through directly to the RIC. To the extent that such income did not consist of investment income, it could jeopardize the Company’s ability to qualify as a RIC and therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or other pass-through entities) are owned by the Taxable Subsidiaries, their income is taxed to the Taxable Subsidiaries and does not flow through to the RIC, thereby helping the Company preserve its RIC status and resultant tax advantages. The Taxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expense as a result of their ownership of the portfolio companies. This income tax expense is reflected in the Company’s Consolidated Statements of Operations. Additionally, any unrealized appreciation related to portfolio investments held by Taxable Subsidiaries (net of unrealized depreciation related to portfolio investments held by the Taxable Subsidiaries) is reflected net of applicable federal and state income taxes in the Company's Unaudited Consolidated Statements of Operations, with the related deferred tax assets presented in the Company's Unaudited Balance Sheet.
For federal income tax purposes, the cost of investments owned as of June 30, 2015 and December 31, 2014 was approximately $923.1 million and $927.7 million, respectively.

30

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


4. BORROWINGS
The Company had the following borrowings outstanding as of June 30, 2015 and December 31, 2014 :
Issuance/Pooling Date
Maturity Date
Interest Rate as of June 30, 2015
June 30, 2015
December 31, 2014
SBA-Guaranteed Debentures:
March 25, 2009
March 1, 2019
5.337%
22,000,000

22,000,000

March 24, 2010
March 1, 2020
4.825%
6,800,000

6,800,000

September 22, 2010
September 1, 2020
3.687%
32,590,000

32,590,000

March 29, 2011
March 1, 2021
4.474%
75,400,000

75,400,000

September 21, 2011
September 1, 2021
3.392%
19,100,000

19,100,000

March 27, 2013
March 1, 2023
3.155%
30,000,000

30,000,000

September 24, 2014
September 1, 2024
3.790%
31,310,000

31,310,000

September 14, 2010 (LMI Debenture)
March 1, 2016
2.508%
7,672,590

7,579,806

Less: Deferred financing fees
(4,700,676
)
(5,082,708
)
Total SBA-Guaranteed Debentures
220,171,914

219,697,098

Credit Facility:
May 4, 2015
May 3, 2020
3.065%
88,758,498

62,619,883

Total Credit Facility
$
88,758,498

$
62,619,883

Notes:
March 2, 2012
March 15, 2019
7.000%
—

69,000,000

October 19, 2012
December 15, 2022
6.375%
80,500,000

80,500,000

February 6, 2015
March 15, 2022
6.375%
86,250,000

—

Less: Deferred financing fees
(4,899,739
)
(3,853,776
)
Total Notes
$
161,850,261

$
145,646,224


SBA-Guaranteed Debentures
Interest payments on SBA-guaranteed debentures are payable semi-annually and there are no principal payments required on these debentures prior to maturity, nor do the debentures carry any prepayment penalties. The Company’s SBA-guaranteed Low or Moderate Income (“LMI”) debenture is a five-year deferred interest debenture that was issued at a discount to par. The accretion of discount on the SBA-guaranteed LMI debenture is classified as interest expense in the Company’s consolidated financial statements.
Under the Small Business Investment Act and current SBA policy applicable to SBICs, an SBIC (or group of SBICs under common control) can have outstanding at any time, SBA-guaranteed debentures and SBA-guaranteed LMI debentures (collectively, SBA-guaranteed debentures) up to two times (and in certain cases, up to three times) the amount of its regulatory capital. As of June 30, 2015 , the maximum statutory limit on the dollar amount of outstanding SBA-guaranteed debentures that can be issued by a single SBIC was $150.0 million and by a group of SBICs under common control was $225.0 million. As of June 30, 2015 , Triangle SBIC had issued the maximum $150.0 million of SBA-guaranteed debentures and Triangle SBIC II had issued $75.0 million in face amount of SBA-guaranteed debentures. The weighted average interest rates for all SBA-guaranteed debentures as of both June 30, 2015 and December 31, 2014 was 4.03%, respectively. As of both June 30, 2015 and December 31, 2014 , all SBA-guaranteed debentures were pooled.
In addition to a one-time 1.0% fee on the total commitment from the SBA, the Company also pays a one-time 2.425% fee on the amount of each SBA-guaranteed debenture issued and a one-time 2.0% fee on the amount of each SBA-guaranteed LMI debenture issued. These fees are capitalized as deferred financing costs and are amortized over the term of the debt agreements using the effective interest method. Upon prepayment of an SBA-guaranteed debenture, any unamortized deferred financing costs related to the SBA-guaranteed debenture are written off and recognized as a loss on extinguishment of debt in the Consolidated Statements of Operations.

31

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


The fair values of the SBA-guaranteed debentures are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of June 30, 2015 and December 31, 2014 , the carrying amounts of the SBA-guaranteed debentures was approximately $220.2 million and $219.7 million , respectively. As of June 30, 2015 and December 31, 2014 , the fair values of the SBA-guaranteed debentures were $230.3 million and $230.4 million, respectively.
Credit Facility
In May 2015, the Company entered into a third amended and restated senior secured credit facility (the “Credit Facility”). The Credit Facility, which has an initial commitment of $300.0 million supported by 14 financial institutions, replaced the Company's $165.0 million senior secured credit facility entered into in June 2013 (the "Prior Facility"). The Credit Facility, which matures May 3, 2020, allows the Company to borrow foreign currencies directly under the Credit Facility.
The Credit Facility has an accordion feature that allows for an increase in the total borrowing size up to $350.0 million, subject to certain conditions and the satisfaction of specified financial covenants. The Credit Facility, which is structured to operate like a revolving credit facility, is secured primarily by the Company's assets, excluding the assets of the Company’s wholly-owned SBIC subsidiaries.
Borrowings under the Credit Facility bear interest, subject to the Company's election, on a per annum basis equal to (i) the applicable base rate plus 1.75% (or, after one year, 1.50% if the Company receives an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75% (or, after one year, 2.50% if the Company receives an investment grade credit rating), or (iii) for borrowings denominated in Canadian dollars, the applicable Canadian Dealer Offered Rate plus 2.75% (or, after one year, 2.50% if the Company receives an investment grade credit rating). The applicable base rate is equal to the greater of (i) the prime rate, (ii) the federal funds rate plus 0.5%, or (iii) the adjusted one-month LIBOR plus 2.0%. The applicable LIBOR rate depends on the term of the draw under the Credit Facility. The Company pays a commitment fee of 1.00% per annum on undrawn amounts if the used portion of the facility is less than or equal to 25.0% of total commitments, or 0.375% per annum on undrawn amounts if the used portion of the facility is greater than 25.0% of total commitments.
Borrowings under the Prior Facility bore interest, subject to the Company's election, on a per annum basis equal to (i) the applicable base rate plus 1.75%, (ii) the applicable LIBOR rate plus 2.75%, or (iii) for borrowings denominated in Canadian dollars, the applicable Canadian Dealer Offered Rate plus 2.75%. The applicable base rate was equal to the greater of (i) the prime rate, (ii) the federal funds rate plus 0.5% or (iii) the adjusted one-month LIBOR rate plus 2.0%. The applicable LIBOR rate depended upon the term of a draw under the Prior Facility. The Company paid a commitment fee of 0.375% per annum on undrawn amounts, which was included with interest and other financing fees on the Company's Consolidated Statements of Operations. Borrowings under the Prior Facility were also limited to a borrowing base, which included certain cash and a portion of eligible debt investments.
As of June 30, 2015 , the Company had United States dollar borrowings of $75.0 million outstanding under the Credit Facility with an interest rate of 2.94% and non-United States dollar borrowings denominated in Canadian dollars of $17.0 million ($13.8 million in United States dollars) outstanding under the Credit Facility with an interest rate of 3.75%. The borrowings denominated in Canadian dollars are translated into United States dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign exchange rates on the Credit Facility borrowings is included in unrealized appreciation (depreciation) on foreign currency borrowings in the Company's Unaudited Consolidated Statements of Operations. The borrowings denominated in Canadian dollars may be positively or negatively affected by movements in the rate of exchange between the United States dollar and the Canadian dollar. This movement is beyond the control of the Company and cannot be predicted. As of December 31, 2014 , the Company had United States dollar borrowings of $48.0 million outstanding under the Prior Facility with an interest rate of 2.91% and non-United States dollar borrowings denominated in Canadian dollars of $17.0 million ($14.6 million United States dollars) outstanding under the Prior Facility with an interest rate of 4.03%.
The fair value of the borrowings outstanding under the Credit Facility are based on a market yield approach and current interest rates, which are Level 3 inputs to the market yield model. As of June 30, 2015 and December 31, 2014 , the fair values of the borrowings outstanding under the Credit Facility and Prior Facility, were $88.8 million and $62.6 million, respectively.
As with the Prior Facility, the Credit Facility contains certain affirmative and negative covenants, including but not limited to (i) maintaining a minimum interest coverage ratio, (ii) maintaining minimum consolidated tangible net worth, (iii) maintaining a minimum asset coverage ratio and (iv) maintaining the Company's status as a regulated investment company and as a BDC. The Credit Facility also contains customary events of default with customary cure and notice provisions, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant,

32

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


cross-default to other indebtedness, bankruptcy, change of control, and material adverse effect. The Credit Facility also permits the Administrative Agent to select an independent third party valuation firm to determine valuations of certain portfolio investments for purposes of borrowing base provisions. As of June 30, 2015 , the Company was in compliance with all covenants of the Credit Facility.
Notes
In March 2012, the Company issued $69.0 million of unsecured notes due 2019 (the “2019 Notes”). The 2019 Notes were redeemed in full on June 22, 2015 for a total redemption price of $69.0 million, which resulted in a loss on the extinguishment of debt of $1.4 million. Prior to the redemption, the 2019 Notes bore interest at a rate of 7.00% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning June 15, 2012. The net proceeds to the Company from the sale of the 2019 Notes, after underwriting discounts and offering expenses, were approximately $66.7 million.
In October 2012, the Company issued $70.0 million of unsecured notes due 2022 (the "December 2022 Notes") and in November 2012, issued $10.5 million of December 2022 Notes pursuant to the exercise of an over-allotment option. The December 2022 Notes mature on December 15, 2022, and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after December 15, 2015. The December 2022 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning December 15, 2012. The net proceeds to the Company from the sale of the December 2022 Notes, after underwriting discounts and offering expenses, were approximately $77.8 million. As of June 30, 2015 and December 31, 2014 , the carrying amount of the December 2022 Notes was $78.3 million and $78.2 million, respectively. As of June 30, 2015 and December 31, 2014 , the fair values of the December 2022 Notes were $82.1 million and $81.4 million, respectively.
In February 2015, the Company issued $86.3 million of unsecured notes due 2022 (the "March 2022 Notes"). The March 2022 Notes mature on March 15, 2022 and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after March 15, 2018. The March 2022 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2015. The net proceeds to the Company from the sale of the March 2022 Notes, after underwriting discounts and offering expenses, were approximately $83.4 million. As of June 30, 2015 , the carrying amount of the March 2022 Notes was $83.5 million. As of June 30, 2015 , the fair values of the March 2022 Notes were $88.7 million . The fair values of the December 2022 Notes and the March 2022 Notes are based on the closing prices of each respective security on the New York Stock Exchange, which are Level 1 inputs under ASC 820.
The indenture and supplements thereto relating to the December 2022 Notes and the March 2022 Notes contain certain covenants, including but not limited to (i) a requirement that the Company comply with the asset coverage requirements of the 1940 Act or any successor provisions and (ii) a requirement to provide financial information to the holders of the notes and the trustee under the indenture if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended.


33

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


5. EQUITY-BASED AND OTHER COMPENSATION PLANS
The Company’s Board of Directors and stockholders have approved the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan (the “Plan”), under which there are 2,400,000 shares of the Company’s Common Stock authorized for issuance. Under the Plan, the Board (or compensation committee, if delegated administrative authority by the Board) may award stock options, restricted stock or other stock-based incentive awards to executive officers, employees and directors. Equity-based awards granted under the Plan to independent directors generally will vest over a one-year period and equity-based awards granted under the Plan to executive officers and employees generally will vest ratably over a four-year period.
The Company accounts for its equity-based compensation plan using the fair value method, as prescribed by ASC Topic 718, Stock Compensation . Accordingly, for restricted stock awards, the Company measures the grant date fair value based upon the market price of the Company’s common stock on the date of the grant and amortizes this fair value to compensation expense ratably over the requisite service period or vesting term.
The following table presents information with respect to the Plan for the six months ended June 30, 2015 and 2014 :
Six Months Ended
June 30, 2015
Six Months Ended
June 30, 2014
Number of
Shares
Weighted Average
Grant Date Fair
Value per Share
Number of
Shares
Weighted Average
Grant Date Fair
Value per Share
Unvested shares, beginning of period
662,965

$25.87
592,173

$23.80
Shares granted during the period
360,840

$21.82
282,630

$26.09
Shares vested during the period
(235,485
)
$24.09
(201,634
)
$21.39
Unvested shares, end of period
788,320

$24.17
673,169

$25.48

In the three and six months ended June 30, 2015 , the Company recognized equity-based compensation expense of approximately $1.8 million and $3.4 million , respectively. In the three and six months ended June 30, 2014 , the Company recognized equity-based compensation expense of approximately $1.5 million and $2.8 million , respectively. This expense is included in general and administrative expenses in the Company’s Unaudited Consolidated Statements of Operations.
As of June 30, 2015 , there was approximately $16.2 million of total unrecognized compensation cost related to the Company’s non-vested restricted shares. This cost is expected to be recognized over a weighted average period of approximately 2.3 years.
The Company’s Board of Directors has adopted a nonqualified deferred compensation plan covering the Company’s executive officers and key employees. Any compensation deferred and the Company’s contributions will earn a return based on the returns on certain investments designated by the Compensation Committee of the Company’s Board of Directors. Participants are 100% vested in amounts deferred under the deferred compensation plan and the earnings thereon. Contributions to the plan and earnings thereon vest ratably over a four-year period.
The Company maintains a 401(k) plan in which all full-time employees who are at least 21 years of age are eligible to participate and receive employer contributions. Eligible employees may contribute a portion of their compensation on a pretax basis into the 401(k) plan up to the maximum amount allowed under the Code, and direct the investment of their contributions.

34

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


6. TRANSACTIONS WITH CONTROLLED COMPANIES
On January 9, 2014, the Company converted its debt investments in SRC Worldwide, Inc. into common stock. After giving effect to this conversion, the Company owned 100% of SRC Worldwide, Inc.'s outstanding common stock. During both the three months ended June 30, 2015 and June 30, 2014 , the Company received management and other fees from SRC Worldwide, Inc. totaling $100,000. During both the six months ended June 30, 2015 and June 30, 2014 , the Company received management and other fees from SRC Worldwide, Inc. totaling $200,000. These fees were recognized as fee income in the Company's Consolidated Statements of Operations.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company is party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend credit, in the form of loans, to the Company's portfolio companies. Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The balance of unused commitments to extend credit as June 30, 2015 and December 31, 2014 were as follows:
June 30, 2015
December 31, 2014
Delayed Draw Term Loans
$
14,675,000

$
9,176,020

Equity Investments in Portfolio Companies
6,340,661

285,715

Private Equity
4,298,084

4,758,882

Revolver
7,900,000

10,000,000

Total Unused Commitments
$
33,213,745

$
24,220,617

The Company may, in the future, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. Since its inception, neither Triangle Capital Corporation nor any of its subsidiaries have been party to any material legal proceedings.


35

Triangle Capital Corporation
Notes to Unaudited Consolidated Financial Statements — (Continued)


8. FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the six months ended June 30, 2015 and 2014 :
Six Months Ended June 30,
2015
2014
Per share data:
Net asset value at beginning of period
$
16.11

$
16.10

Net investment income(1)
1.02

1.02

Net realized gain (loss) on investments(1)
(0.42
)
0.42

Net unrealized appreciation (depreciation) on investments / foreign currency(1)
0.06

(0.10
)
Total increase from investment operations(1)
0.66

1.34

Dividends paid to stockholders from net investment income
(1.18
)
(1.08
)
Dividends paid to stockholders from realized gains
—

(0.30
)
Total dividends paid
(1.18
)
(1.38
)
Shares issued pursuant to Dividend Reinvestment Plan
0.02

0.02

Stock-based compensation
(0.10
)
(0.11
)
Loss on extinguishment of debt(1)
(0.04
)
—

Benefit (provision) for taxes(1)
—

(0.03
)
Other(2)
—

0.01

Net asset value at end of period
$
15.47

$
15.95

Market value at end of period(3)
$
23.44

$
28.37

Shares outstanding at end of period
33,272,167

27,939,795

Net assets at end of period
$
514,816,781

$
445,774,416

Average net assets
$
528,821,227

$
448,378,127

Ratio of total expenses, including provision for taxes and loss on extinguishment of debt, to average net assets (annualized)
10.44
%
9.51
%
Ratio of net investment income to average net assets (annualized)
12.83
%
12.71
%
Portfolio turnover ratio
18.08
%
15.82
%
Total return(4)
21.34
%
7.59
%
Supplemental Data:
Efficiency ratio(5)
18.62
%
20.78
%
(1)
Weighted average basic per share data.
(2)
Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.
(3)
Represents the closing price of the Company’s common stock on the last day of the period.
(4)
Total return equals the change in the ending market value of the Company’s common stock during the period, plus dividends declared per share during the period, divided by the market value of the Company’s common stock on the first day of the period. Total return is not annualized.
(5)
Efficiency ratio equals general and administrative expenses divided by total investment income.

9. SUBSEQUENT EVENTS
In July 2015, the Company invested $15.3 million in subordinated debt and equity of Community Medical Group, an operator of primary care clinics. Under the terms of the investment, the subordinated debt bears interest at a rate of 12.0%.
In July 2015, the Company invested $11.2 million in subordinated debt of Community Intervention Services, a provider of community-based and outpatient behavioral health services. Under the terms of the investment, the subordinated debt bears interest at a rate of 12.0%.


36


TRIANGLE CAPITAL CORPORATION
Unaudited Schedule of Investments in and Advances to Affiliates
Six Months Ended June 30, 2015
Portfolio Company
Type of Investment
Amount of Interest or Dividends Credits to Income(1)
December 31, 2014
Value
Gross Additions(2)
Gross Reductions(3)
June 30, 2015
Value
Control Investments:
CRS Reprocessing, LLC
Senior Notes (3.7% Cash)
$
16,892

$
—

$
2,942,769

$
—

$
2,942,769

Split Collateral Term Loans (10.5% Cash, Due 06/16)
32,589

—

3,192,464

—

3,192,464

Series F Preferred Units (705,321 units)
—

—

8,725,000

—

8,725,000

Common Units (15,174 units)
—

—

—

—

—

49,481

—

14,860,233

—

14,860,233

Gerli & Company
Subordinated Note (13% Cash)
—

375,000

—

—

375,000

Subordinated Note (8.5% Cash)
—

543,000

—

10,000

533,000

Class A Preferred Shares (1,211 shares)
—

—

—

—

—

Class C Preferred Shares (744 shares)
—

—

—

—

—

Class E Preferred Shares (400 shares)
—

—

—

—

—

Common Stock (300 shares)
—

—

—

—

—

—

918,000

—

10,000

908,000

PartsNow!, LLC
Subordinated Note (15% PIK)
—

6,233,000

—

4,233,000

2,000,000

Preferred Membership Units (5,500,000 units)
—

—

1,500,000

1,500,000

—

Common Member Units (1,500,000 units)
—

—

—

—

—

Royalty Rights
—

—

—

—

—

—

6,233,000

1,500,000

5,733,000

2,000,000

SRC, Inc.
Common Stock (5,000 shares)
200,000

7,824,000

—

841,000

6,983,000

200,000

7,824,000

—

841,000

6,983,000

Total Control Investments
249,481

14,975,000

16,360,233

6,584,000

24,751,233

Affiliate Investments:
All Aboard America! Holdings Inc.
Subordinated Note (12% Cash, 3% PIK)
1,186,975

14,442,239

251,029

—

14,693,268

Membership Units in LLC
—

2,207,492

695,508

—

2,903,000

1,186,975

16,649,731

946,537

—

17,596,268

American De-Rosa Lamparts, LLC and Hallmark Lighting, LLC
Subordinated Note (12% Cash, 2% PIK)
548,580

7,069,614

119,327

99,637

7,089,304

Membership Units (8,364 units)
—

936,000

730,000

—

1,666,000

548,580

8,005,614

849,327

99,637

8,755,304

AP Services, Inc.
Class A Units (933 units)
—

2,394

27,702

30,096

—

Class B Units (496 units)
—

1,272

—

1,272

—

—

3,666

27,702

31,368

—


37


TRIANGLE CAPITAL CORPORATION
Unaudited Schedule of Investments in and Advances to Affiliates
Six Months Ended June 30, 2015
Portfolio Company
Type of Investment
Amount of Interest or Dividends Credits to Income(1)
December 31, 2014
Value
Gross Additions(2)
Gross Reductions(3)
June 30, 2015
Value
Asset Point, LLC
Senior Note (11.3% Cash, 4.8% PIK)
$
649,193

$
7,990,172

$
192,729

$
—

$
8,182,901

Subordinated Note (12% Cash, 2% PIK)
46,391

656,310

6,627

—

662,937

Membership Units (1,000,000 units)
—

—

—

—

—

Options to Purchase Membership Units (342,407 units)
—

204,000

2,000

—

206,000

Membership Unit Warrants (356,506 units)
—

—

—

—

—

695,584

8,850,482

201,356

—

9,051,838

Captek Softgel International, Inc.
Subordinated Note (9.5% Cash)
818,476

16,715,906

12,574

—

16,728,480

Class A Units (80,000 units)
—

1,719,000

39,000

—

1,758,000

818,476

18,434,906

51,574

—

18,486,480

CIS Secure Computing Inc.
Subordinated Note (12% Cash, 4% PIK)
922,729

10,035,000

377,000

—

10,412,000

Common Stock (84 shares)
—

40,000

6,000

46,000

922,729

10,075,000

383,000

—

10,458,000

DPII Holdings, LLC
Senior Note (12% Cash, 4% PIK)
290,412

3,394,913

80,325

—

3,475,238

Class A Membership Interest (17,308 units)
—

1,107,692

—

—

1,107,692

290,412

4,502,605

80,325

—

4,582,930

Dyson Corporation
Class A Units (1,000,000 units)
—

324,000

—

192,000

132,000

—

324,000

—

192,000

132,000

Frank Entertainment Group, LLC
Senior Note (10% Cash, 5.8% PIK)
732,247

8,513,033

827,757

—

9,340,790

Class A Redeemable Preferred Units (10.5% Cash) (196,718 units)
238,414

4,405,000

161,904

—

4,566,904

Class B Redeemable Preferred Units (18,667 units)
—

1,537,000

123,810

—

1,660,810

Class C Redeemable Preferred Units (8,615 units)
—

—

200,000

—

200,000

Class A Common Units (43,077 units)
—

—

—

—

—

Class A Common Warrants
—

—

—

—

—

970,661

14,455,033

1,313,471

—

15,768,504

Halcyon Healthcare, LLC
Subordinated Note (10% Cash)
637,693

11,278,779

18,289

—

11,297,068

Preferred Interests (2,000,000 interests)
—

2,000,000

492,000

—

2,492,000

637,693

13,278,779

510,289

—

13,789,068

Main Street Gourmet, LLC
Jr. Subordinated Note (8% Cash, 2% PIK)
40,238

754,197

9,478

—

763,675

Preferred Units (233 units)
—

333,000

16,000

—

349,000

Common B Units (3,000 units)
—

1,108,000

560,000

—

1,668,000

Common A Units (1,652 units)
—

610,000

309,000

—

919,000

40,238

2,805,197

894,478

—

3,699,675


38


TRIANGLE CAPITAL CORPORATION
Unaudited Schedule of Investments in and Advances to Affiliates
Six Months Ended June 30, 2015
Portfolio Company
Type of Investment
Amount of Interest or Dividends Credits to Income(1)
December 31, 2014
Value
Gross Additions(2)
Gross Reductions(3)
June 30, 2015
Value
Minco Technology Labs
Subordinated Note (6.5% Cash, 3.5% PIK)
$
180,818

$
—

$
5,665,445

$
5,665,445

$
—

Class A Units (5,000 HoldCo. units)
—

—

—

—

—

Class A Units (3,907 OpCo. units)
—

—

—

—

—

180,818

—

5,665,445

5,665,445

—

NB Products, Inc.
Subordinated Note (12% Cash, 2% PIK)
1,211,114

—

20,086,736

—

20,086,736

Jr. Subordinated Note (10% PIK)
144,447

—

3,907,927

—

3,907,927

Series A Redeemable Senior Preferred Stock (7,839 shares)
156,779

—

7,621,648

—

7,621,648

Common Stock (1,668,691 shares)
—

—

333,738

—

333,738

1,512,340

—

31,950,049

—

31,950,049

PCX Aerostructures, LLC
Subordinated Note (11% Cash, 3% PIK)
1,405,884

19,087,302

324,783

—

19,412,085

Series A Preferred Stock (5,344 shares)
—

5,343,953

—

2,320,953

3,023,000

Class A Common Stock (107,416 shares)
—

26,854

—

26,854

—

1,405,884

24,458,109

324,783

2,347,807

22,435,085

Playhaven, LLC
Senior Note (9.5% Cash, 2.5% PIK)
2,098,065

20,712,285

2,534,778

23,247,063

—

Class A Common Units (999,999 units)
—

869,999

464,000

1,333,999

—

Class C Common Units (1 unit)
—

5,001

—

5,001

—

2,098,065

21,587,285

2,998,778

24,586,063

—

QC Holdings, Inc.
Common Stock (5,594 shares)
—

470,000

147,840

601,440

16,400

—

470,000

147,840

601,440

16,400

Team Waste, LLC
Preferred Units (25 units)
50,000

—

5,000,000

—

5,000,000

50,000

—

5,000,000

—

5,000,000

Technology Crops, LLC
Subordinated Note (12% Cash, 5% PIK)
950,917

10,670,076

298,731

—

10,968,807

Common Units (50 units)
—

162,000

761,000

—

923,000

950,917

10,832,076

1,059,731

—

11,891,807

TGaS Advisors, LLC
Subordinated Note (10% Cash, 1% PIK)
570,378

9,742,396

69,519

124,486

9,687,429

Preferred Units (1,685,357)
—

1,685,357

—

1,685,357

570,378

11,427,753

69,519

124,486

11,372,786

UCS Super HoldCo LLC
Membership Units (1,000 units)
—

1,000,000

—

—

1,000,000

Participation Interest
—

2,000,000

—

—

2,000,000

—

3,000,000

—

—

3,000,000

United Retirment Plan Consultants, Inc.
Preferred A Shares (90,000 shares)
—

—

1,215,000

338,000

877,000

Common Shares (10,000 shares)
—

—

—

—

—

—

—

1,215,000

338,000

877,000

Venture Technology Groups, Inc.
Subordinated Note (12.5% Cash, 4% PIK)
65,455

225,000

75,000

300,000

—

65,455

225,000

75,000

300,000

—


39


TRIANGLE CAPITAL CORPORATION
Unaudited Schedule of Investments in and Advances to Affiliates
Six Months Ended June 30, 2015
Portfolio Company
Type of Investment
Amount of Interest or Dividends Credits to Income(1)
December 31, 2014
Value
Gross Additions(2)
Gross Reductions(3)
June 30, 2015
Value
Waste Recyclers Holdings, LLC
Class A Preferred Units (280 units)
$
—

$
—

$
—

$
—

$
—

Class B Preferred Units (985,372 units)
—

1,727,000

—

1,003,000

724,000

Class C Preferred Units (1,444,475 units)
—

—

—

—

—

Common Unit Purchase Warrant (1,170,083 units)
—

—

—

—

—

Common Units (153,219 units)
—

—

—

—

—

—

1,727,000

—

1,003,000

724,000

Wythe Will Tzetzo, LLC
Series A Preferred Units (99,829 units)
299,208

7,823,000

—

129,000

7,694,000

299,208

7,823,000

—

129,000

7,694,000

Total Affiliate Investments
$
13,244,413

$
178,935,236

$
53,764,204

$
35,418,246

$
197,281,194


(1)
Represents the total amount of interest, fees or dividends credited to income for the portion of the year an investment was included in Control or Affiliate categories, respectively.
(2)
Gross additions include increase in the cost basis of investments resulting from new portfolio investment, follow-on investments, and accrued PIK interest, as well as transfers of investments into the affiliate or control categories. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(3)
Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales, as well as transfers of investments out of the affiliate or control categories. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.

This schedule should be read in conjunction with Triangle Capital Corporation's Unaudited Consolidated Financial Statements, including the Unaudited Consolidated Schedules of Investments.


40


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is designed to provide a better understanding of our financial statements, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2014 . Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.
Forward-Looking Statements
Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Words such as “expect,” “anticipate,” “target,” “goals,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “forecast,” “may,” “should,” “potential,” variations of such words, and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Readers are cautioned that the forward-looking statements contained in this Quarterly Report are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors discussed herein and in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2014 . Other factors that could cause actual results to differ materially include, but are not limited to, changes in the economy, risks associated with possible disruption due to terrorism in our operations or the economy generally, and future changes in laws or regulations and conditions in our operating areas. These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of this Quarterly Report. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview of Our Business
We are a Maryland corporation which has elected to be treated and operates as an internally managed business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. Our wholly-owned subsidiaries, Triangle Mezzanine Fund LLLP, or Triangle SBIC, and Triangle Mezzanine Fund II LP, or Triangle SBIC II, are licensed as small business investment companies, or SBICs, by the United States Small Business Administration, or SBA. In addition, Triangle SBIC has also elected to be treated as a BDC under the 1940 Act. We, Triangle SBIC and Triangle SBIC II invest primarily in debt instruments, equity investments, warrants and other securities of lower middle market privately-held companies located primarily in the United States.
Our business is to provide capital to lower middle market companies located primarily in the United States. We focus on investments in companies with a history of generating revenues and positive cash flows, an established market position and a proven management team with a strong operating discipline. Our target portfolio company has annual revenues between $20.0 million and $200.0 million and annual earnings before interest, taxes, depreciation and amortization, or EBITDA, between $3.0 million and $35.0 million.
We invest primarily in subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. On a more limited basis, we also invest in senior debt securities secured by first lien security interests in portfolio company assets. Our investments generally range from $5.0 million to $35.0 million per portfolio company. In certain situations, we have partnered with other funds to provide larger financing commitments.
We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income. Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned. In addition, we generate revenue in the form of capital gains, if any, on warrants or other equity-related securities that we acquire from our portfolio companies. Our debt

41


investments generally have a term of between three and seven years and typically bear interest at fixed rates between 10.0% and 15.0% per annum. Certain of our debt investments have a form of interest, referred to as payment-in-kind, or PIK, interest, that is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term. In our negotiations with potential portfolio companies, we generally seek to minimize PIK interest. Cash interest on our debt investments is generally payable monthly; however, some of our debt investments pay cash interest on a quarterly basis. As of June 30, 2015 and December 31, 2014 , the weighted average yield on our outstanding debt investments other than non-accrual debt investments was approximately 12.6% and 13.0%, respectively. The weighted average yield on all of our outstanding investments (including equity and equity-linked investments but excluding non-accrual debt investments) was approximately 10.9% and 11.6% as of June 30, 2015 and December 31, 2014 , respectively. The weighted average yield on all of our outstanding investments (including equity and equity-linked investments and non-accrual debt investments) was approximately 10.5% and 10.8% as of June 30, 2015 and December 31, 2014 , respectively.
Triangle SBIC and Triangle SBIC II are eligible to issue debentures to the SBA, which pools these with debentures of other SBICs and sells them in the capital markets at favorable interest rates, in part as a result of the guarantee of payment from the SBA. Triangle SBIC and Triangle SBIC II invest these funds in portfolio companies. We intend to continue to operate Triangle SBIC and Triangle SBIC II as SBICs, subject to SBA approval, and to utilize the proceeds from the issuance of SBA-guaranteed debentures, referred to herein as SBA leverage, to enhance returns to our stockholders.
Portfolio Investment Composition
The total value of our investment portfolio was $884.9 million as of June 30, 2015 , as compared to $887.2 million as of December 31, 2014 . As of June 30, 2015 , we had investments in 88 portfolio companies with an aggregate cost of $917.9 million . As of December 31, 2014 , we had investments in 91 portfolio companies with an aggregate cost of $922.1 million . As of both June 30, 2015 and December 31, 2014 , none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.
As of June 30, 2015 and December 31, 2014 , our investment portfolio consisted of the following investments:
Cost
Percentage of
Total
Portfolio
Fair Value
Percentage of
Total
Portfolio
June 30, 2015:
Subordinated debt and 2nd lien notes
$
701,900,002

76
%
$
669,517,627

76
%
Senior debt and 1st lien notes
92,229,433

10

90,887,433

10

Equity shares
117,562,497

13

120,812,430

14

Equity warrants
6,215,918

1

3,681,000

—

Royalty rights
—

—

—

—

$
917,907,850

100
%
$
884,898,490

100
%
December 31, 2014:
Subordinated debt and 2nd lien notes
$
703,800,176

76
%
$
660,377,024

74
%
Senior debt and 1st lien notes
116,654,301

13

115,252,247

13

Equity shares
92,384,676

10

103,132,851

12

Equity warrants
9,213,469

1

8,461,000

1

Royalty rights
—

—

—

—

$
922,052,622

100
%
$
887,223,122

100
%

Investment Activity
During the six months ended June 30, 2015 , we made seven new investments totaling $129.3 million, debt investments in five existing portfolio companies totaling $27.3 million and equity investments in nine existing portfolio companies totaling $6.6 million. We had eleven portfolio company loans repaid totaling $136.2 million resulting in realized gains totaling $1.9 million and received normal principal repayments and partial loan prepayments totaling $6.1 million in the six months ended June 30, 2015 . We converted subordinated debt investments in one portfolio company into an equity investment and recognized a net realized loss on such conversion totaling $20.5 million. In addition, we received proceeds related to the sales of certain equity securities totaling $11.9 million and recognized net realized gains on such sales totaling $4.8 million in the six months ended June 30, 2015 .


42


During the six months ended June 30, 2014 , we made eleven new investments totaling approximately $139.1 million, debt investments in eight existing portfolio companies totaling approximately $24.5 million and equity investments in three existing portfolio companies totaling approximately $1.3 million. We had nine portfolio company loans repaid at par of approximately $68.8 million resulting in realized gains totaling approximately $0.8 million and received normal principal repayments and partial loan prepayments totaling approximately $19.8 million in the six months ended June 30, 2014 . We converted debt investments in one portfolio company into an equity investment and recognized a net realized loss on such conversion totaling approximately $0.2 million. In addition, we received proceeds related to the sales of certain equity securities totaling approximately $16.4 million and recognized net realized gains on such sales totaling approximately $11.2 million in the six months ended June 30, 2014 .
Total portfolio investment activity for the six months ended June 30, 2015 and 2014 was as follows:
Six Months Ended
June 30, 2015:
Subordinated
Debt and 2 nd
Lien Notes
Senior Debt
and 1 st Lien
Notes
Equity
Shares
Equity
Warrants
Royalty
Rights
Total
Fair value, beginning of period
$
660,377,024

$
115,252,247

$
103,132,851

$
8,461,000

$
—

$
887,223,122

New investments
133,503,814

7,446,253

21,068,498

1,252,000

—

163,270,565

Reclassifications
(8,707,740
)
—

8,707,740

—

—

—

Proceeds from sales of investments
—

—

(4,901,207
)
(6,992,088
)
—

(11,893,295
)
Loan origination fees received
(2,819,164
)
—

—

—

—

(2,819,164
)
Principal repayments received
(109,212,658
)
(33,105,582
)
—

—

—

(142,318,240
)
PIK interest earned
6,731,749

929,111

—

—

—

7,660,860

PIK interest payments received
(6,478,328
)
(1,206,033
)
—

—

—

(7,684,361
)
Accretion of loan discounts
202,718

35,511

—

—

—

238,229

Accretion of deferred loan origination revenue
2,531,596

671,072

—

—

—

3,202,668

Realized gain (loss)
(17,652,163
)
804,802

302,790

2,742,537

—

(13,802,034
)
Unrealized gain (loss)
11,040,779

60,052

(7,498,242
)
(1,782,449
)
—

1,820,140

Fair value, end of period
$
669,517,627

$
90,887,433

$
120,812,430

$
3,681,000

$
—

$
884,898,490

Weighted average yield on debt investments at end of period(1)
12.6
%
Weighted average yield on total investments at end of period(1)
10.9
%
Weighted average yield on total investments at end of period
10.5
%
(1)
Excludes non-accrual debt investments.


43


Six Months Ended
June 30, 2014:
Subordinated
Debt and 2 nd
Lien Notes
Senior Debt
and 1 st Lien
Notes
Equity
Shares
Equity
Warrants
Royalty
Rights
Total
Fair value, beginning of period
$
514,467,575

$
45,968,765

$
79,935,246

$
23,928,603

$
73,000

$
664,373,189

New investments
137,230,617

10,200,175

16,777,550

632,000

—

164,840,342

Reclassifications
(3,964,597
)
(5,963,403
)
11,715,000

(1,787,000
)
—


—

Proceeds from sales of investments
—

—

(5,800,481
)
(11,020,560
)
—

(16,821,041
)
Loan origination fees received
(2,625,648
)
(212,778
)
—

—

—

(2,838,426
)
Principal repayments received
(88,089,399
)
(116,058
)
—

—

—

(88,205,457
)
PIK interest earned
7,369,836

511,468

—

—

—

7,881,304

PIK interest payments received
(5,267,116
)
—

—

—

—

(5,267,116
)
Accretion of loan discounts
644,575

—

—

—

—

644,575

Accretion of deferred loan origination revenue
1,722,418

61,185

—

—

—

1,783,603

Realized gains
126,617

—

2,055,808

9,571,750

—

11,754,175

Unrealized gain (loss)
269,176

3,929

9,107,693

(11,175,793
)
(73,000
)
(1,867,995
)
Fair value, end of period
$
561,884,054

$
50,453,283

$
113,790,816

$
10,149,000

$
—

$
736,277,153

Weighted average yield on debt investments at end of period(1)
13.8
%
Weighted average yield on total investments at end of period(1)
12.2
%
Weighted average yield on total investments at end of period
11.7
%
(1)
Excludes non-accrual debt investments.
Non-Accrual Assets
Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. As of June 30, 2015 , the fair value of our non-accrual assets was $13.9 million , which comprised 1.6% of the total fair value of our portfolio, and the cost of our non-accrual assets was $28.8 million , which comprised 3.1% of the total cost of our portfolio. As of December 31, 2014 , the fair value of our non-accrual assets was $26.9 million , which comprised 3.0% of the total fair value of our portfolio, and the cost of our non-accrual assets was $53.1 million , which comprised 5.8% of the total cost of our portfolio.
Our non-accrual assets as of June 30, 2015 were as follows:
Eckler's Holdings, Inc.
In April 2015, we placed our debt investment in Eckler's Holdings, Inc., or Eckler's, on non-accrual status effective with the quarterly payment due March 31, 2015. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in Eckler's for financial reporting purposes. In the six months ended June 30, 2015 , we recognized unrealized appreciation on our debt investment in Eckler's of $1.3 million . As of June 30, 2015 , the cost of our debt investment in Eckler's was $7.3 million and the fair value of such investment was $6.8 million .
Gerli and Company
In November 2008, we placed our debt investments in Gerli and Company, or Gerli, on non-accrual status. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investments in Gerli for financial reporting purposes. In the six months ended June 30, 2015 , we recognized unrealized depreciation on our debt investments in Gerli of $10,000. As of June 30, 2015 , the cost of our debt investments in Gerli was $3.4 million and the fair value of such investments was $0.9 million .

44


PartsNow!, LLC
In October 2014, we placed our debt investment in PartsNow!, LLC, or PartsNow, on non-accrual status effective with the quarterly payment due September 30, 2014. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in PartsNow for financial reporting purposes. During the six months ended June 30, 2015 , we recorded unrealized depreciation of $4.2 million on our debt investment in PartsNow. As of June 30, 2015 , the cost of our debt investment in PartsNow was $11.5 million and the fair value of such investment was $2.0 million .
PowerDirect Marketing, LLC
In August 2014, we placed our debt investment in PowerDirect Marketing, LLC, or PowerDirect, on non-accrual status effective with the monthly payment due July 31, 2014. As a result, under U.S. GAAP, we no longer recognize interest income on our debt investment in PowerDirect for financial reporting purposes. During the six months ended June 30, 2015 , we recorded unrealized appreciation of $0.4 million on our debt investment in PowerDirect. As of June 30, 2015 , the cost of our debt investment in PowerDirect was $6.6 million and the fair value of such investment was $4.2 million .
PIK Non-Accrual Assets
In addition to our non-accrual assets, as of June 30, 2015 , we had debt investments in two portfolio companies (our subordinated note to DCWV Acquisition Corporation and our term loan B senior note to FCL Graphics, Inc.) that were on non-accrual only with respect to the PIK interest component of the loans. As of June 30, 2015 , the fair value of these debt investments was $4.0 million , or 0.4% of the total fair value of our portfolio and the cost of these assets was $7.4 million , or 0.8% of the total cost of our portfolio.

Results of Operations
Comparison of three months ended June 30, 2015 and June 30, 2014
Investment Income
For the three months ended June 30, 2015 , total investment income was $27.8 million , an 11.6% increase from $24.9 million of total investment income for the three months ended June 30, 2014 . This increase was primarily attributable to an increase in portfolio debt investments from June 30, 2014 to June 30, 2015 . This increase was partially offset by a $1.4 million decrease in investment income relating to non-accrual assets, a $0.6 million decrease in non-recurring fee and dividend income and a decrease in the weighted average yield on our debt investments from June 30, 2014 to June 30, 2015 . Non-recurring fee income was $1.7 million for the three months ended June 30, 2015 as compared to $1.6 million for the three months ended June 30, 2014 , and non-recurring dividend income was $0.2 million for the three months ended June 30, 2015 as compared to $1.0 million for the three months ended June 30, 2014 .
Operating Expenses
For the three months ended June 30, 2015 , operating expenses increased by 13.4% to $11.7 million from $10.3 million for the three months ended June 30, 2014 . Our operating expenses consist of interest and other financing fees and general and administrative expenses.
For the three months ended June 30, 2015 , interest and other financing fees increased by 42.0% to $7.3 million from $5.2 million for the three months ended June 30, 2014 largely due to increased debt outstanding between the periods. The increase in interest and other financing fees was related to interest expense and fees on our March 2022 Notes of $1.5 million in the three months ended June 30, 2015 , an increase in interest and other financing fees on our SBA-guaranteed debentures of $0.2 million in the three months ended June 30, 2015 and an increase in interest and other financing fees on our Credit Facility of $0.5 million in the three months ended June 30, 2015 . These increases were partially offset by a $0.1 million decrease in interest and other financing fees from the redemption of the 2019 Notes in the three months ended June 30, 2015 .
Our general and administrative expenses are primarily influenced by compensation, headcount and levels of business activity. Our compensation expenses include salaries, discretionary compensation, equity-based compensation and benefits. Discretionary compensation is significantly impacted by our level of total investment income, our investment results including investment realizations, prevailing labor markets and the external environment. As a result of these and other factors, our compensation expense can fluctuate materially from period to period. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in a future period.

45


For the three months ended June 30, 2015 , general and administrative expenses decreased by 15.4% to $4.3 million from $5.1 million for the three months ended June 30, 2014 . In addition, our efficiency ratio (defined as general and administrative expenses as a percentage of total investment income) decreased to 15.6% for the three months ended June 30, 2015 from 20.5% for the three months ended June 30, 2014 . The decrease in general and administrative expenses in the quarter ended June 30, 2015 was primarily related to decreased cash compensation expense partially offset by an increase in non-cash compensation expense.
Net Investment Income
As a result of the $2.9 million increase in total investment income and the $1.4 million increase in expenses, net investment income increased by 10.3% to $16.2 million for the three months ended June 30, 2015 as compared to $14.7 million for the three months ended June 30, 2014 .
Net Increase/Decrease in Net Assets Resulting from Operations
In the three months ended June 30, 2015 , we recognized realized losses totaling $17.1 million , which consisted of a loss on the restructuring of one control investment totaling $20.5 million partially offset by net gains related to the sales/repayments of three affiliate investments of $0.2 million and net gains on the sales/repayments of five non-control/non-affiliate investments totaling $3.2 million . In addition, during the three months ended June 30, 2015 , we recorded net unrealized appreciation totaling $14.5 million , consisting of net unrealized depreciation on our current portfolio of $3.2 million and net unrealized appreciation reclassification adjustments of $17.7 million related to the realized gains and losses noted above.
In the three months ended June 30, 2014 , we realized gains on the sales/repayments of four non-control/non-affiliate investments totaling approximately $11.5 million and a gain relating to the sale of one affiliate investment totaling $0.2 million. In addition, during the three months ended June 30, 2014 , we recorded net unrealized depreciation of investments totaling $1.2 million, consisting of net unrealized appreciation on our current portfolio of approximately $9.9 million and net unrealized depreciation reclassification adjustments of $11.1 million related to the realized gains and losses noted above.
During the three months ended June 30, 2015 , we recognized a loss on extinguishment of debt of approximately $1.4 million related to the redemption of the 2019 Notes.
As a result of these events, our net increase in net assets resulting from operations was $12.2 million for the three months ended June 30, 2015 , as compared to a net increase in net assets resulting from operations of $24.2 million for the three months ended June 30, 2014 .
Comparison of six months ended June 30, 2015 and June 30, 2014
Investment Income
For the six months ended June 30, 2015 , total investment income was $58.6 million , a 19.7% increase from $49.0 million of total investment income for the six months ended June 30, 2014 . This increase was primarily attributable to an increase in portfolio debt investments from June 30, 2014 to June 30, 2015 and a $1.7 million increase in non-recurring fee income. This increase was partially offset by a $2.9 million decrease in investment income relating to non-accrual assets, a $0.3 million decrease in non-recurring dividend income and a decrease in the weighted average yield on our debt investments from June 30, 2014 to June 30, 2015 . Non-recurring fee income was $4.9 million for the six months ended June 30, 2015 as compared to $3.1 million for the six months ended June 30, 2014 , and non-recurring dividend income was $1.9 million for the six months ended June 30, 2015 as compared to $2.2 million for the six months ended June 30, 2014 .
Operating Expenses
For the six months ended June 30, 2015 operating expenses increased 20.5% to $24.7 million from $20.5 million for the six months ended June 30, 2014 . Our operating expenses consist of interest and other financing fees and general and administrative expenses.
For the six months ended June 30, 2015 , interest and other debt financing fees increased by 33.6% to $13.8 million from $10.3 million for the six months ended June 30, 2014 largely due to increased debt outstanding between the periods. The increase in interest and other financing fees was related to interest expense and fees on our March 2022 Notes of $2.4 million in the six months ended June 30, 2015 , an increase in interest and other financing fees on our SBA-guaranteed debentures of $0.6 million in the six months ended June 30, 2015 and an increase in interest and other financing fees on our Credit Facility of $0.6 million in the six months ended June 30, 2015 . These increases were partially offset by a $0.1 million decrease in interest and other financing fees from the redemption of the 2019 Notes in the six months ended June 30, 2015 .

46


Our general and administrative expenses are primarily influenced by compensation, headcount and levels of business activity. Our compensation expenses include salaries, discretionary compensation, equity-based compensation and benefits. Discretionary compensation is significantly impacted by our level of total investment income, our investment results including investment realizations, prevailing labor markets and the external environment. As a result of these and other factors, our compensation expense can fluctuate materially from period to period. Accordingly, the amount of compensation expense recognized in any particular period may not be indicative of compensation expense in a future period.
For the six months ended June 30, 2015 , general and administrative expenses increased by 7.2% to $10.9 million from $10.2 million for the six months ended June 30, 2014 . In addition, our efficiency ratios (defined as general and administrative expenses as a percentage of total investment income) were 18.6% and 20.8% for the six months ended June 30, 2015 and June 30, 2014 , respectively. The increase in general and administrative expenses in the six months ended June 30, 2015 was primarily related to increased cash and non-cash compensation expenses.
Net Investment Income
As a result of the $9.6 million increase in total investment income and the $4.2 million increase in expenses, net investment income increased by 19.1% to $33.9 million for the six months ended June 30, 2015 as compared to net investment income of $28.5 million for the six months ended June 30, 2014 .
Net Increase/Decrease in Net Assets Resulting from Operations
In the six months ended June 30, 2015 , we recognized realized losses totaling $13.8 million which consisted of a loss on the restructuring of one control investment totaling $20.5 million partially offset by net gains related to the sale/repayments of four affiliate investments of $0.3 million and net gains on the sales/repayments of nine non-control/non-affiliate investments totaling $6.4 million . In addition, during the six months ended June 30, 2015 , we recorded net unrealized appreciation of investments totaling $1.9 million , consisting of net unrealized depreciation on our current portfolio of approximately $12.5 million and net unrealized appreciation adjustments of $14.4 million related to the realized gains and losses noted above.
In the six months ended June 30, 2014 , we realized gains on the sales/repayments of six non-control/non-affiliate investments totaling approximately $12.2 million, a loss relating to the sale of one non-control/non-affiliate investment totaling approximately $0.4 million, a gain on the sale of one affiliate investment totaling approximately $0.2 million and a loss on the restructuring of one control investment of approximately $0.2 million, In addition, during the six months ended June 30, 2014 , we recorded net unrealized depreciation of investments totaling $2.7 million, consisting of net unrealized appreciation on our current portfolio of approximately $8.9 million and net unrealized depreciation adjustments of $11.6 million related to the realized gains and losses noted above.
During the six months ended June 30, 2015 , we recognized a loss on extinguishment of debt of approximately $1.4 million related to the redemption of the 2019 Notes.
As a result of these events, our net increase in net assets from operations was $20.5 million for the six months ended June 30, 2015 , a decrease of 44.1% from the net increase in net assets from operations of $36.7 million for the six months ended June 30, 2014 .
Liquidity and Capital Resources
We believe that our current cash and cash equivalents on hand, our available leverage under our Credit Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.
In the future, depending on the valuation of Triangle SBIC’s assets and Triangle SBIC II’s assets pursuant to SBA guidelines, Triangle SBIC and Triangle SBIC II may be limited by provisions of the Small Business Investment Act of 1958, or the Small Business Investment Act, and SBA regulations governing SBICs, from making certain distributions to Triangle Capital Corporation that may be necessary to enable Triangle Capital Corporation to make the minimum required distributions to its stockholders and qualify as a RIC.
Cash Flows
For the six months ended June 30, 2015 , we experienced a net increase in cash and cash equivalents in the amount of $38.8 million . During that period, our operating activities provided $40.1 million in cash and our financing activities caused our cash to decrease by $1.3 million , primarily due to repayments under the Credit Facility of $56.0 million , redemption of the 2019 notes of $69.0 million and cash dividends paid in the amount of $37.5 million , partially offset by proceeds from the the

47


March 2022 Notes offerings of $83.4 million and borrowings under the Credit Facility of $83.0 million . As of June 30, 2015 , we had $117.5 million of cash and cash equivalents on hand.
For the six months ended June 30, 2014 , we experienced a net decrease in cash and cash equivalents in the amount of $53.7 million . During that period, our operating activities used $34.1 million in cash, consisting primarily of new portfolio investments of $164.8 million , partially offset by repayments received from portfolio companies and proceeds from sales of portfolio investments of approximately $105.0 million . In addition, financing activities reduced cash by $19.5 million , consisting primarily of cash dividends paid in the amount of $29.0 million and cash distributions of capital gains paid in the amount of $8.0 million, partially offset by borrowings under our Credit Facility of $20.0 million . As of June 30, 2014 , we had $79.6 million of cash and cash equivalents on hand.
Financing Transactions
Due to Triangle SBIC’s and Triangle SBIC II’s status as licensed SBICs, Triangle SBIC and Triangle SBIC II have the ability to issue debentures guaranteed by the SBA at favorable interest rates. Under the Small Business Investment Act and the SBA rules applicable to SBICs, an SBIC (or group of SBICs under common control) can have outstanding at any time debentures guaranteed by the SBA up to two times (and in certain cases, up to three times) the amount of its regulatory capital, which generally is the amount raised from private investors. The maximum statutory limit on the dollar amount of outstanding debentures guaranteed by the SBA issued by a single SBIC is currently $150.0 million and by a group of SBICs under common control is $225.0 million. Debentures guaranteed by the SBA have a maturity of ten years, with interest payable semi-annually. The principal amount of the debentures is not required to be paid before maturity but may be prepaid at any time, without penalty. Our SBA-guaranteed debentures are collateralized by the assets of Triangle SBIC and Triangle SBIC II.
As of June 30, 2015 , Triangle SBIC had issued the maximum $150.0 million of SBA-guaranteed debentures and Triangle SBIC II had issued $75.0 million in face amount of SBA-guaranteed debentures. In addition to the one-time 1.0% fee on the total commitment from the SBA, we also pay a one-time 2.425% fee on the amount of each debenture issued (2.0% for SBA LMI debentures). These fees are capitalized as deferred financing costs and are amortized over the term of the debt agreements using the effective interest method. The weighted average interest rate for all SBA-guaranteed debentures as of June 30, 2015 was 4.03%. As of June 30, 2015 , all SBA-guaranteed debentures were pooled.
In May 2015, we entered into a third amended and restated senior secured credit facility, or the Credit Facility. The Credit Facility, which has an initial commitment of $300.0 million supported by 14 financial institutions, replaced our $165.0 million senior secured credit facility entered into in June 2013, or the Prior Facility. The Credit Facility, which matures May 3, 2020, allows us to borrow foreign currencies directly under the Credit Facility.
The Credit Facility has an accordion feature that allows for an increase in the total borrowing size up to $350.0 million, subject to certain conditions and the satisfaction of specified financial covenants. The Credit Facility, which is structured to operate like a revolving credit facility, is secured primarily by our assets, excluding the assets of our wholly-owned SBIC subsidiaries.
Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.75% (or, after one year, 1.50% if we receive an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75% (or, after one year, 2.50% if we receive an investment grade credit rating), or (iii) for borrowings denominated in Canadian dollars, the applicable Canadian Dealer Offered Rate plus 2.75% (or, after one year, 2.50% if we receive an investment grade credit rating). The applicable base rate is equal to the greater of (i) the prime rate, (ii) the federal funds rate plus 0.5%, or (iii) the adjusted one-month LIBOR plus 2.0%. The applicable LIBOR rate depends on the term of the draw under the Credit Facility. We pay a commitment fee of 1.00% per annum on undrawn amounts if the used portion of the facility is less than or equal to 25.0% of total commitments, or 0.375% per annum on undrawn amounts if the used portion of the facility is greater than 25.0% of total commitments.
As of June 30, 2015 , we had United States dollar borrowings of $75.0 million outstanding under the Credit Facility with an interest rate of 2.94% and non-United States dollar borrowings denominated in Canadian dollars of $17.0 million ($13.8 million in United States dollars) outstanding under the Credit Facility with an interest rate of 3.75%. The borrowings denominated in Canadian dollars are translated into United States dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign exchange rates on the Credit Facility borrowings is included in unrealized appreciation (depreciation) on foreign currency borrowings in our Unaudited Consolidated Statements of Operations. The borrowings denominated in Canadian dollars may be positively or negatively affected by movements in the rate of exchange between the United States dollar and the Canadian dollar. This movement is beyond our control and cannot be predicted.

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As with the Prior Facility, the Credit Facility contains certain affirmative and negative covenants, including but not limited to (i) maintaining a minimum interest coverage ratio, (ii) maintaining minimum consolidated tangible net worth, (iii) maintaining a minimum asset coverage ratio and (iv) maintaining our status as a regulated investment company and as a BDC. The Credit Facility also contains customary events of default with customary cure and notice provisions, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change of control, and material adverse effect. The Credit Facility also permits the Administrative Agent to select an independent third party valuation firm to determine valuations of certain portfolio investments for purposes of borrowing base provisions. In connection with the Credit Facility, we also entered into new collateral documents. As of June 30, 2015 , we were in compliance with all covenants of the Credit Facility.
In March 2012, we issued $69.0 million of 2019 Notes. The 2019 Notes were redeemed in full on June 22, 2015 for a total redemption price of $69.0 million, which resulted in a loss on the extinguishment of debt of $1.4 million. Prior to the redemptions, the 2019 Notes bore interest at a rate of 7.00% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning June 15, 2012. The net proceeds from the sale of the 2019 Notes, after underwriting discounts and offering expenses, were $66.7 million.
In October 2012, we issued $70.0 million of December 2022 Notes and in November 2012, we issued $10.5 million of December 2022 Notes pursuant to the exercise of an over-allotment option. The December 2022 Notes mature on December 15, 2022, and may be redeemed in whole or in part at any time or from time to time at our option on or after December 15, 2015. The December 2022 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning December 15, 2012. The net proceeds from the sale of the December 2022 Notes, after underwriting discounts and offering expenses, were $77.8 million.
In February 2015, we issued $86.3 million of March 2022 Notes. The March 2022 Notes mature on March 15, 2022 and may be redeemed in whole or in part at any time or from time to time at our option on or after March 15, 2018. The March 2022 Notes bear interest at a rate of 6.375% per year payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2015. The net proceeds from the sale of the March 2022 Notes, after underwriting discounts and offering expenses, were $83.4 million.
The indenture and supplements thereto relating to the December 2022 Notes and the March 2022 Notes contain certain covenants, including but not limited to (i) a requirement that we comply with the asset coverage requirements of the 1940 Act or any successor provisions, and (ii) a requirement that we provide financial information to the holders of the notes and the trustee under the indenture if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Distributions to Stockholders
We elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year ended December 31, 2007. In order to maintain our qualification as a RIC and to obtain RIC tax benefits, we must meet certain minimum distribution, source-of-income and asset diversification requirements. If such requirements are met, then we are generally required to pay income taxes only on the portion of our taxable income and gains we do not distribute (actually or constructively) and certain built-in gains. We have historically met our minimum distribution requirements and continually monitor our distribution requirements with the goal of ensuring compliance with the Code. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and our ability to make distributions will be limited by the asset coverage requirements under the 1940 Act.
The minimum distribution requirements applicable to RICs require us to distribute to our stockholders each year at least 90% of our investment company taxable income, or ICTI, as defined by the Code. Depending on the level of ICTI earned in a tax year, we may choose to carry forward ICTI in excess of current year distributions into the next tax year and pay a 4% excise tax on such excess. Any such carryover ICTI must be distributed before the end of the next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. We may be required to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants), we must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in ICTI other amounts that we have not yet received in cash, such as (i) PIK interest income and (ii) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in our ICTI for the year of

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accrual, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
Recent Developments
In July 2015, we invested $15.3 million in subordinated debt and equity of Community Medical Group, an operator of primary care clinics. Under the terms of the investment, the subordinated debt bears interest at a rate of 12.0%.
In July 2015, we invested $11.2 million in subordinated debt of Community Intervention Services, a provider of community-based and outpatient behavioral health services. Under the terms of the investment, the subordinated debt bears interest at a rate of 12.0%.
Critical Accounting Policies and Use of Estimates
The preparation of our unaudited financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods covered by such financial statements. We have identified investment valuation and revenue recognition as our most critical accounting estimates. On an on-going basis, we evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.
Investment Valuation
The most significant estimate inherent in the preparation of our financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. We have established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring (quarterly) basis in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, or ASC Topic 820. Under ASC Topic 820, a financial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value measurement. The three levels of valuation inputs established by ASC Topic 820 are as follows:
Level 1 Inputs – include quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs – include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs – include inputs that are unobservable and significant to the fair value measurement.
Our investment portfolio is comprised of debt and equity instruments of privately held companies for which quoted prices or other inputs falling within the categories of Level 1 and Level 2 are not available. Therefore, we determine the fair value of our investments in good faith using Level 3 inputs, pursuant to a valuation policy and process that is established by our management with the assistance of certain third-party advisors and subsequently approved by our Board of Directors. There is no single standard for determining fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. The recorded fair values of our investments may differ significantly from fair values that would have been used had an active market for the securities existed. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.
Our valuation process is led by our executive officers and managing directors. The valuation process begins with a quarterly review of each investment in our investment portfolio by our executive officers and our investment committee. Valuations of each portfolio security are then prepared by our investment professionals, who have direct responsibility for the origination, management and monitoring of each investment. Under our valuation policy, each investment valuation is subject to (i) a review by the lead investment officer responsible for the portfolio company investment and (ii) a peer review by a second investment officer or executive officer. Generally, any investment that is valued below cost is subjected to review by one of our executive officers. After the peer review is complete, we engage two independent valuation firms, including Duff & Phelps, LLC, collectively, the "Valuation Firms," to provide third-party reviews of certain investments, as described further below. Finally, the Board of Directors has the responsibility for reviewing and approving, in good faith, the fair value of our investments in accordance with the 1940 Act.

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The Valuation Firms provide third party valuation consulting services to us which consist of certain limited procedures that we identified and requested the Valuation Firms to perform, which we refer herein to as the Procedures. The Procedures are performed with respect to each portfolio company at least once in every calendar year and for new portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In addition, the Procedures are generally performed with respect to a portfolio company when there has been a significant change in the fair value of the investment. In certain instances, we may determine that it is not cost-effective, and as a result is not in our stockholders’ best interest, to request the Valuation Firms to perform the Procedures on one or more portfolio companies. Such instances include, but are not limited to, situations where the fair value of the investment in the portfolio company is determined to be insignificant relative to the total investment portfolio.
The total number of investments and the percentage of our portfolio on which the Procedures were performed are summarized below by period:
For the quarter ended:
Total
companies
Percent of total
investments at
fair value (1)
March 31, 2014
15
25%
June 30, 2014
15
31%
September 30, 2014
18
29%
December 31, 2014
16
24%
March 31, 2015
16
28%
June 30, 2015
15
26%
(1)
Exclusive of the fair value of new investments made during the quarter.
Upon completion of the Procedures, the Valuation Firms concluded that, with respect to each investment reviewed by each Valuation Firm, the fair value of those investments subjected to the Procedures appeared reasonable. Our Board of Directors is ultimately responsible for determining the fair value of our investments in good faith.
Investment Valuation Inputs
Under ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between a willing buyer and a willing seller at the measurement date. For our portfolio securities, fair value is generally the amount that we might reasonably expect to receive upon the current sale of the security. Under ASC Topic 820, the fair value measurement assumes that the sale occurs in the principal market for the security, or in the absence of a principal market, in the most advantageous market for the security. Under ASC Topic 820, if no market for the security exists or if we do not have access to the principal market, the security should be valued based on the sale occurring in a hypothetical market. The securities in which we invest are generally only purchased and sold in merger and acquisition transactions, in which case the entire portfolio company is sold to a third-party purchaser. As a result, unless we have the ability to control such a transaction, the assumed principal market for our securities is a hypothetical secondary market. The Level 3 inputs to our valuation process reflect management’s best estimate of the assumptions that would be used by market participants in pricing the investment in a transaction in a hypothetical secondary market.
Enterprise Value Waterfall Approach
In valuing equity securities (including warrants), we estimate fair value using an “Enterprise Value Waterfall” valuation model. We estimate the enterprise value of a portfolio company and then allocate the enterprise value to the portfolio company’s securities in order of their relative liquidation preference. In addition, the model assumes that any outstanding debt or other securities that are senior to our equity securities are required to be repaid at par. Additionally, we estimate the fair value of a limited number of its debt securities using the Enterprise Value Waterfall approach in cases where we do not expect to receive full repayment.
To estimate the enterprise value of the portfolio company, we primarily use a valuation model based on a transaction multiple, which generally is the original transaction multiple, and measures of the portfolio company’s financial performance. In addition, we consider other factors, including but not limited to (i) offers from third-parties to purchase the portfolio company, (ii) the implied value of recent investments in the equity securities of the portfolio company, (iii) publicly available information regarding recent sales of private companies in comparable transactions and (iv) when management believes there are comparable companies that are publicly traded, we perform a review of these publicly traded companies and the market multiple of their equity securities. For certain non-performing assets, we may utilize the liquidation or collateral value of the portfolio company's assets in our estimation of enterprise value.

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The significant Level 3 inputs to the Enterprise Value Waterfall model are (i) an appropriate transaction multiple and (ii) a measure of the portfolio company’s financial performance, which generally is either earnings before interest, taxes, depreciation and amortization, as adjusted, or Adjusted EBITDA, or revenues. Such inputs can be based on historical operating results, projections of future operating results or a combination thereof. The operating results of a portfolio company may be unaudited, projected or pro forma financial information and may require adjustments for certain non-recurring items. In determining the operating results input, we utilize the most recent portfolio company financial statements and forecasts available as of the valuation date. Management also consults with the portfolio company’s senior management to obtain updates on the portfolio company’s performance, including information such as industry trends, new product development, loss of customers and other operational issues. Additionally, we consider some or all of the following factors:
•
financial standing of the issuer of the security;
•
comparison of the business and financial plan of the issuer with actual results;
•
the size of the security held;
•
pending reorganization activity affecting the issuer, such as merger or debt restructuring;
•
ability of the issuer to obtain needed financing;
•
changes in the economy affecting the issuer;
•
financial statements and reports from portfolio company senior management and ownership;
•
the type of security, the security’s cost at the date of purchase and any contractual restrictions on the disposition of the security;
•
information as to any transactions or offers with respect to the security and/or sales to third parties of similar securities;
•
the issuer’s ability to make payments and the type of collateral;
•
the current and forecasted earnings of the issuer;
•
statistical ratios compared to lending standards and to other similar securities;
•
pending public offering of common stock by the issuer of the security;
•
special reports prepared by analysts; and
•
any other factors we deem pertinent with respect to a particular investment.
Fair value measurements using the Enterprise Value Waterfall model can be sensitive to significant changes in one or more of the inputs. A significant increase in either the transaction multiple, Adjusted EBITDA or revenues for a particular equity security would result in a higher fair value for that security.
Income Approach
In valuing debt securities, we utilize an “Income Approach” model that considers factors including, but not limited to, (i) the stated yield on the debt security, (ii) the portfolio company’s current trailing twelve months, or TTM Adjusted EBITDA as compared to the portfolio company’s historical or projected Adjusted EBITDA as of the date the investment was made and the portfolio company’s anticipated Adjusted EBITDA for the next twelve months of operations, (iii) the portfolio company’s current Leverage Ratio (defined as the portfolio company’s total indebtedness divided by Adjusted EBITDA) as compared to its Leverage Ratio as of the date the investment was made, (iv) publicly available information regarding current pricing and credit metrics for similar proposed and executed investment transactions of private companies and (v) when management believes a relevant comparison exists, current pricing and credit metrics for similar proposed and executed investment transactions of publicly traded debt. In addition, we use a risk rating system to estimate the probability of default on the debt securities and the probability of loss if there is a default. This risk rating system covers both qualitative and quantitative aspects of the business and the securities held.
We consider the factors above, particularly any significant changes in the portfolio company’s results of operations and leverage, and develop an expectation of the yield that a hypothetical market participant would require when purchasing the debt investment, which we refer to herein as the Required Rate of Return. The Required Rate of Return, along with the Leverage Ratio and Adjusted EBITDA, are the significant Level 3 inputs to the Income Approach model. For investments where the Leverage Ratio and Adjusted EBITDA have not fluctuated significantly from the date the investment was made or have not fluctuated significantly from management’s expectations as of the date the investment was made, and where there have been no significant fluctuations in the market pricing for such investments, we may conclude that the Required Rate of Return is equal

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to the stated rate on the investment and therefore, the debt security is appropriately priced. In instances where we determine that the Required Rate of Return is different from the stated rate on the investment, we discount the contractual cash flows on the debt instrument using the Required Rate of Return in order to estimate the fair value of the debt security.
Fair value measurements using the Income Approach model can be sensitive to significant changes in one or more of the inputs. A significant increase (decrease) in the Required Rate of Return or Leverage Ratio inputs for a particular debt security may result in a lower (higher) fair value for that security. A significant increase (decrease) in the Adjusted EBITDA input for a particular debt security may result in a higher (lower) fair value for that security.
The fair value of our royalty rights are calculated based on specific provisions contained in the pertinent operating or royalty agreements. The determination of the fair value of such royalty rights is not a significant component of our valuation process.
Revenue Recognition
Interest and Dividend Income
Interest income, adjusted for amortization of premium and accretion of original issue discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. The cessation of recognition of such interest will negatively impact the reported fair value of the investment. We write off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend date.
We may have to include in our ICTI interest income, including OID income, from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy the minimum distribution requirements to maintain our RIC status, even though we will not have received and may not ever receive any corresponding cash amount. Additionally, any loss recognized by us for federal income tax purposes on previously accrued interest income will be treated as a capital loss.
Fee Income
Origination, facility, commitment, consent and other advance fees received in connection with the origination of a loan, or Loan Origination Fees, are recorded as deferred income and recognized as investment income over the term of the loan. Upon prepayment of a loan, any unamortized Loan Origination Fees are recorded as investment income. In the general course of our business, we receive certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties, certain investment banking and structuring fees and loan waiver and amendment fees, and are recorded as investment income when earned.
Payment-in-Kind (PIK) Interest Income
We currently hold, and we expect to hold in the future, some loans in our portfolio that contain a PIK interest provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is periodically added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.
PIK interest, which is a non-cash source of income, is included in our taxable income and therefore affects the amount we are required to distribute to our stockholders to maintain our qualification as a RIC for federal income tax purposes, even though we have not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if we otherwise do not expect the borrower to be able to service its debt and other obligations, we will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible. We write off any previously accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.
We may have to include in our ICTI, PIK interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. As a result, we may be required to make a distribution to our stockholders in order to satisfy

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the minimum distribution requirements, even though we will not have received and may not ever receive any corresponding cash amount.
Recently Issued Accounting Standards
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We elected early adoption of this standard on January 1, 2015. As a result, deferred financing fees related to our outstanding notes and SBA-guaranteed debentures payable are no longer presented as an asset on our Consolidated Balance Sheets but are included as a reduction in the carrying amount of the debt securities. Debt issuance costs related to our senior secured credit facility will continue to be presented as an asset on our Consolidated Balance Sheets. ASU 2015-03 is effective for interim and annual periods beginning after December 15, 2015. In addition, our Consolidated Balance Sheet as of December 31, 2014 has been adjusted to reflect the effects of adoption of ASU 2015-03 on a retrospective basis.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on our Consolidated Balance Sheets. At June 30, 2015, we had a total of $33.2 million in outstanding commitments comprised of (i) $22.6 million in commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) $10.6 million in capital commitments that had not been fully called.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to market risk. Market risk includes risks that arise from changes in interest rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies we invest in; conditions affecting the general economy; overall market changes; legislative reform; local, regional, national or global political, social or economic instability; and interest rate fluctuations.
In addition, we are subject to interest rate risk. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio. Our net investment income is affected by fluctuations in various interest rates, including LIBOR, Canadian Dealer Offered Rate and prime rates. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. We regularly measure exposure to interest rate risk and determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. As of June 30, 2015 , we were not a party to any hedging arrangements.
As of June 30, 2015 , 89.5% , or $710.9 million (at cost), of our debt portfolio investments bore interest at fixed rates and 10.5% , or $83.2 million (at cost), of our debt portfolio investments bore interest at variable rates, which are either prime-based or LIBOR-based, and all of which are subject to certain floors. A hypothetical 200 basis point increase or decrease in the interest rates on our variable-rate debt investments could increase or decrease, as applicable, our investment income by a maximum of $1.7 million on an annual basis. All of our SBA-guaranteed debentures, our December 2022 Notes and our March 2022 Notes bear interest at fixed rates. Our Credit Facility bears interest, subject to our election, on a per annum basis equal to (i) the applicable base rate plus 1.75% (or, after one year, 1.50% if we receive an investment grade credit rating), (ii) the applicable LIBOR rate plus 2.75% (or, after one year, 2.50% if we receive an investment grade credit rating), or (iii) for borrowings denominated in Canadian dollars, the applicable Canadian Dealer Offered Rate plus 2.75% (or, after one year, 2.50% if we receive an investment grade credit rating). The applicable base rate is equal to the greater of (i) the prime rate, (ii) the federal funds rate plus 0.5%, or (iii) the adjusted one-month LIBOR plus 2.0%. The applicable LIBOR rate depends on the term of the draw under the Credit Facility. We pay a commitment fee of 1.00% per annum on undrawn amounts if the used portion of the facility is less than or equal to 25.0% of total commitments, or 0.375% per annum on undrawn amounts if the used portion of the facility is greater than 25.0% of total commitments.

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Because we currently borrow, and plan to borrow in the future, money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income if there is not a corresponding increase in interest income generated by our investment portfolio.

We may also have exposure to foreign currencies (currently the Canadian dollar) related to certain investments. Such investments are translated into United States dollars based on the spot rate at each balance sheet date, exposing us to movements in the exchange rate. In order to reduce our exposure to fluctuations in exchange rates, we generally borrow in Canadian dollars under our Credit Facility to finance such investments. As of June 30, 2015 , we had non-United States dollar borrowings denominated in Canadian dollars of $17.0 million ($13.8 million United States dollars) outstanding under the Credit Facility with an interest rate of 3.75%.

Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the second quarter of 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.
Neither Triangle Capital Corporation nor any of its subsidiaries is currently a party to any material pending legal proceedings.

Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 , filed with the SEC on March 2, 2015, which could materially affect our business, financial condition or operating results. Other than as set forth below, there have been no material changes during the six months ended June 30, 2015 to the risk factors discussed in our Annual Report on Form 10-K. The risks described below and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
We face cyber-security risks.
Our business operations rely upon secure information technology systems for data processing, storage and reporting. Despite careful security and controls design, implementation and updating, our information technology systems could become subject to cyber-attacks. Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to maintain the availability of our electronic data systems and safeguard the security of our data, our ability to conduct business may be compromised, which impair our liquidity, disrupt our business, damage our reputation and cause losses.
Cybersecurity refers to the combination of technologies, processes, and procedures established to protect information technology systems and data from unauthorized access, attack, or damage. We are subject to cybersecurity risks. Information cyber security risks have significantly increased in recent years and, while we have not experienced any material losses relating to cyber attacks or other information security breaches, we could suffer such losses in the future. Our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize confidential and other information, including nonpublic personal information and sensitive business data, processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations or the operations of our customers or counterparties, which could result in significant losses or reputational damage. This could result in significant losses, reputational damage, litigation, regulatory fines or penalties, or otherwise adversely affect our business, financial condition or results of operations. Privacy and information security laws and regulation changes, and compliance with those changes, may result in cost increases due to system changes and the development of new administrative processes. In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities or other exposures arising from operational and security risks. We currently do not maintain insurance coverage relating to cybersecurity risks, and we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are not fully insured.
Third parties with which we do business may also be sources of cybersecurity or other technological risks. We outsource certain functions and these relationships allow for the storage and processing of our information, as well as customer, counterparty, employee and borrower information. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
During the six months ended June 30, 2015, we issued 71,248 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933. The aggregate value for the shares of common stock issued during the six months ended June 30, 2015 under the dividend reinvestment plan was approximately $1.7 million.

56


Issuer Purchases of Equity Securities
None.

Item 3. Defaults Upon Senior Securities.
None.

Item 4. Mine Safety Disclosures.
Not applicable.

Item 5. Other Information.
None.


57


Item 6. Exhibits.
Number
Exhibit
3.1
Articles of Amendment and Restatement of the Registrant (Filed as Exhibit (a)(3) to the Registrant’s Registration Statement on Form N-2/N-5 (File No. 333-138418) filed with the Securities and Exchange Commission on December 29, 2006 and incorporated herein by reference).
3.2
Fourth Amended and Restated Bylaws of the Registrant (Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2014 and incorporated herein by reference).
4.1
Form of Common Stock Certificate (Filed as Exhibit (d) to the Registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form N-2/N-5 (File No. 333-138418) filed with the Securities and Exchange Commission on February 15, 2007 and incorporated herein by reference).
4.2
Dividend Reinvestment Plan of the Registrant (Filed as Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 12, 2008 and incorporated herein by reference).
4.3
Agreement to Furnish Certain Instruments (Filed as Exhibit 4.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on February 25, 2009 and incorporated herein by reference).
4.4
Indenture, dated March 2, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(5) to the Registrant’s Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.5
First Supplemental Indenture, dated March 2, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(6) to the Registrant’s Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.6
Form of 7.00% Note due 2019 (Included as part of Exhibit (d)(6) to the Registrant's Post-Effective Amendment No. 2 on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.7
Second Supplemental Indenture, dated October 19, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2012 and incorporated herein by reference).
4.8
Form of 6.375% Note due 2022 (Included as part of Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2012 and incorporated herein by reference).
4.9
Third Supplemental Indenture, dated February 6, 2015 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(12) to the Registrant's Post-Effective Amendment No. 1 on Form N-2 filed with the Securities and Exchange Commission on February 6, 2015 and incorporated herein by reference).
4.10
Form of 6.375% Note due 2022 (Included as part of Exhibit (d)(12) to the Registrant's Post-Effective Amendment No. 1 on Form N-2 filed with the Securities and Exchange Commission on February 6, 2015 and incorporated herein by reference).
10.1
Custody Agreement between the Registrant and Branch Banking and Trust Company dated June 20, 2014 (Filed as Exhibit (j)(1) to the Registrant's Registration Statement on Form N-2 filed with the Securities and Exchange Commission on October 1, 2014 and incorporated herein by reference).
10.2
Third Amended and Restated Credit Agreement, dated May 4, 2015, among the Company, Branch Banking and Trust Company, ING Capital LLC, Fifth Third Bank, Morgan Stanley Bank, N.A., Bank of North Carolina, EverBank Commercial Finance, Inc. First Tennessee Bank National Association, Newbridge Bank, Yadkin Bank, CommunityOne Bank, NA, Park Sterling Bank, Paragon Commercial Bank, Raymond James Bank, N.A. and Stifel Bank & Trust (Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).
10.3
Second Amended and Restated Equity Pledge Agreement between Triangle Capital Corporation, ARC Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc., Technology Crops Holdings, Inc. and Branch Banking and Trust Company dated May 4, 2015 (Filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).

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10.4
Second Amended and Restated General Security Agreement between Triangle Capital Corporation, ARC Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc., Technology Crops Holdings, Inc. and Branch Banking and Trust Company dated May 4, 2015 (Filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).
31.1
Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Chief Executive Officer Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2
Chief Financial Officer Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

*
Filed Herewith.
**
Furnished Herewith.

59


SIGNATURES
Pursuant to the requirements 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.
TRIANGLE CAPITAL CORPORATION
Date:
August 5, 2015
/s/    Garland S. Tucker, III
Garland S. Tucker, III
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
Date:
August 5, 2015
/s/    Steven C. Lilly
Steven C. Lilly
Chief Financial Officer, Secretary and
Director (Principal Financial Officer)
Date:
August 5, 2015
/s/    C. Robert Knox, Jr.
C. Robert Knox, Jr.
Principal Accounting Officer


60


EXHIBIT INDEX

Number
Exhibit
3.1
Articles of Amendment and Restatement of the Registrant (Filed as Exhibit (a)(3) to the Registrant's Registration Statement on Form N-2/N-5 (File No. 333-138418) filed with the Securities and Exchange Commission on December 29, 2006 and incorporated herein by reference).
3.2
Fourth Amended and Restated Bylaws of the Registrant (Filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2014 and incorporated herein by reference).
4.1
Form of Common Stock Certificate (Filed as Exhibit (d) to the Registrant's Post-Effective Amendment No. 1 to the Registration Statement on Form N-2/N-5 (File No. 333-138418) filed with the Securities and Exchange Commission on February 15, 2007 and incorporated herein by reference).
4.2
Dividend Reinvestment Plan of the Registrant (Filed as Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission on March 12, 2008 and incorporated herein by reference).
4.3
Agreement to Furnish Certain Instruments (Filed as Exhibit 4.19 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission on February 25, 2009 and incorporated herein by reference).
4.4
Indenture, dated March 2, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(5) to the Registrant's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.5
First Supplemental Indenture, dated March 2, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(6) to the Registrant's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.6
Form of 7.00% Note due 2019 (Included as part of Exhibit (d)(6) to the Registrant's Post-Effective Amendment No. 2 on Form N-2 filed with the Securities and Exchange Commission on March 2, 2012 and incorporated herein by reference).
4.7
Second Supplemental Indenture, dated October 19, 2012 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2012 and incorporated herein by reference).
4.8
Form of 6.375% Note due 2022 (Included as part of Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 19, 2012 and incorporated herein by reference).
4.9
Third Supplemental Indenture, dated February 6, 2015 between the Registrant and the Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit (d)(12) to the Registrant's Post-Effective Amendment No. 1 on Form N-2 filed with the Securities and Exchange Commission on February 6, 2015 and incorporated herein by reference).
4.10
Form of 6.375% Note due 2022 (Included as part of Exhibit (d)(12) to the Registrant's Post-Effective Amendment No. 1 on Form N-2 filed with the Securities and Exchange Commission on February 6, 2015 and incorporated herein by reference).
10.1
Custody Agreement between the Registrant and Branch Banking and Trust Company dated June 20, 2014 (Filed as Exhibit (j)(1) to the Registrant's Registration Statement on Form N-2 filed with the Securities and Exchange Commission on October 1, 2014 and incorporated herein by reference).
10.2
Third Amended and Restated Credit Agreement, dated May 4, 2015, among the Company, Branch Banking and Trust Company, ING Capital LLC, Fifth Third Bank, Morgan Stanley Bank, N.A., Bank of North Carolina, EverBank Commercial Finance, Inc. First Tennessee Bank National Association, Newbridge Bank, Yadkin Bank, CommunityOne Bank, NA, Park Sterling Bank, Paragon Commercial Bank, Raymond James Bank, N.A. and Stifel Bank & Trust (Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).
10.3
Second Amended and Restated Equity Pledge Agreement between Triangle Capital Corporation, ARC Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc., Technology Crops Holdings, Inc. and Branch Banking and Trust Company dated May 4, 2015 (Filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).



10.4
Second Amended and Restated General Security Agreement between Triangle Capital Corporation, ARC Industries Holdings, Inc., Brantley Holdings, Inc., Energy Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc., Technology Crops Holdings, Inc. and Branch Banking and Trust Company dated May 4, 2015 (Filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2015 and incorporated herein by reference).
31.1
Chief Executive Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Chief Financial Officer Certification Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Chief Executive Officer Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2
Chief Financial Officer Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
*
Filed Herewith.
**
Furnished Herewith.

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