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EX-32.1 - CERTIFICATION OF CEO AND CFO PURSUANT TO SECTION 906 - Corporate Capital Trust, Inc.ex-32_1.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 - Corporate Capital Trust, Inc.ex-31_2.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 - Corporate Capital Trust, Inc.ex-31_1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2012
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 814-00827
 
Corporate Capital Trust, Inc.
(Exact name of registrant as specified in its charter)
 
     
Maryland
 
27-2857503
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
   
CNL Center at City Commons
450 South Orange Avenue
Orlando, Florida
 
32801
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code (866) 745-3797
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    x      No    ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes      ¨     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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
¨
  
Accelerated filer
 
¨
       
Non-accelerated filer
 
x   (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 x
 
The number of shares of common stock of the registrant outstanding as of August 10, 2012 was 37,451,428.
 
 


 

 
CORPORATE CAPITAL TRUST, INC.
 INDEX
 
PART I. FINANCIAL INFORMATION
  PAGE
         
   Item 1.
   
  
 
         
         2  
         
         3  
         
         4  
         
         5  
         
         6  
         
         20  
         
    Item 2.
   
  33
 
         
    Item 3.
   
  43
 
         
    Item 4.
   
  45
 
       
 
  
 
         
    Item 1.
   
  45
 
         
    Item 1A.
   
45
 
         
    Item 2.
   
45
 
         
   
45
 
         
       45  
         
    Item 5.
       45  
         
    Item 6.
   
45
 
         
     46  
       
 
47
 
 
 
 

 

Financial Statements
 
 Corporate Capital Trust, Inc. and Subsidiary
 
   
June 30, 2012
   
December 31, 2011
 
Assets
           
Investments at fair value (amortized cost of $414,508,778 and $113,825,998)
  $ 416,510,810     $ 114,304,509  
Cash denominated in foreign currency (cost $80,109 and $—)
    81,536        
Dividends and interest receivable
    5,418,925       1,055,807  
Receivable for investments sold
    2,877,307        
Principal receivable
    568,385       59,399  
Unrealized appreciation on foreign currency forward contracts
    1,152        
Receivable from advisors
    274,137       564,756  
Deferred financing costs
    167,999       203,275  
Deferred offering expense
    635,600        
Prepaid expenses and other assets
    130,725       35,533  
Total assets
  $ 426,666,576     $ 116,223,279  
Liabilities
               
Revolving credit facility
  $ 77,940,000     $ 25,340,000  
Payable for investments purchased
    62,468,959       24,714,313  
Unrealized depreciation on foreign currency forward contracts
    74,142        
Accrued performance-based incentive fees
    638,690       282,570  
Accrued investment advisory fees
    643,498       160,679  
Accrued reimbursement of expense support
    30,093        
Shareholders' distributions payable
          398,637  
Accrued administrative services
    84,953       56,390  
Accrued directors' fees
    6,613       5,400  
Other accrued expenses and liabilities
    753,318       102,561  
Total liabilities
    142,640,266       51,060,550  
Net Assets
               
Common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 29,461,798 and 7,073,166 shares issued and outstanding
    29,462       7,073  
Paid-in capital in excess of par value
    282,010,247       64,626,198  
Net realized gains on investments
    75,243        
Undistributed net investment income
          5,956  
Accumulated net unrealized appreciation on investments and foreign currency translation
    1,911,358       523,502  
Net assets
  $ 284,026,310     $ 65,162,729  
Net asset value per share
  $ 9.64     $ 9.21  
 
See notes to condensed consolidated financial statements.
 
 
2

 
 
Corporate Capital Trust, Inc. and Subsidiary
 
   
For the three months ended
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
   
June 30, 2012
   
June 30, 2011
 
Investment income
                       
Interest income
  $ 6,249,211     $     $ 9,623,339     $  
Dividend income
    635             3,888        
Total investment income
    6,249,846             9,627,227        
Operating expenses
                               
Investment advisory fees
    1,621,659       973       2,515,819       973  
Performance-based incentive fees
    (342,279 )           532,967        
Organization expenses
    368,477             896,218        
Interest expense
    513,635             833,764        
Professional services
    346,809       4,977       555,350       4,977  
Administrative services
    264,869       13,291       434,001       13,291  
Director fees and expenses
    50,989       7,288       99,224       7,288  
Offering expense
    83,822             83,822        
Custodian and accounting fees
    28,277       5,293       68,754       5,293  
Other
    197,089       8,458       318,446       8,458  
Total operating expenses
    3,133,347       40,280       6,338,365       40,280  
Reimbursement of expense support
    30,093             30,093        
Expense support
    (627,423 )     (40,280 )     (1,590,221 )     (40,280 )
Net expenses
    2,536,017             4,778,237        
Net investment income
    3,713,829             4,848,990        
Realized and unrealized gain (loss):
                               
Net realized gain on investments
    536,644             1,271,895        
Net realized gain on foreign currency transactions
    49,171             42,886        
Net change in unrealized appreciation (depreciation) on investments
    (2,098,928 )           1,523,521        
Net change in unrealized depreciation on foreign currency translation
    (125,017 )           (135,665 )      
Net realized and unrealized gain (loss)
    (1,638,130 )           2,702,637        
Net increase in net assets resulting from operations
  $ 2,075,699     $     $ 7,551,627     $  
Net Investment Income Per Share
  $ 0.17     $     $ 0.29     $  
Diluted and Basic Earnings Per Share
  $ 0.09     $     $ 0.46     $  
Weighted Average Shares Outstanding
    22,102,008       2,265,714       16,525,646       2,265,714  
Dividends Declared Per Share
  $ 0.19     $     $ 0.38     $  
 
See notes to condensed consolidated financial statements.
 
 
3

 
 
Corporate Capital Trust, Inc. and Subsidiary
 
   
For the six months ended
   
June 30, 2012
   
June 30, 2011
 
Operations
           
Net investment income
  $ 4,848,990     $  
Net realized gain on investments and foreign currency transactions
    1,314,781        
Net change in unrealized appreciation on investments and foreign currency translation
    1,387,856        
Net increase in net assets resulting from operations
    7,551,627        
Distributions to shareholders from
               
Net investment income
    (4,854,946 )      
Realized gains
    (1,239,538 )      
Net decrease in net assets resulting from shareholders distributions
    (6,094,484 )      
Capital share transactions
               
Issuance of shares of common stock
    214,058,425       2,400,750  
Reinvestment of shareholders distributions
    3,348,013        
Net increase in net assets resulting from capital share transactions
    217,406,438       2,400,750  
Total increase in net assets
    218,863,581       2,400,750  
Net assets at beginning of period
    65,162,729       200,000  
Net assets at end of period
  $ 284,026,310     $ 2,600,750  
Capital share activity
               
Shares issued from subscriptions
    22,043,951       266,750  
Shares issued from reinvestment of distributions
    344,681        
Net increase in shares outstanding
    22,388,632       266,750  
Undistributed net investment income at end of period
  $     $  
 
See notes to condensed consolidated financial statements.
 
 
4

 

Corporate Capital Trust, Inc. and Subsidiary
 
   
For the six months ended
 
   
June 30, 2012
   
June 30, 2011
 
             
Operating Activities:
           
Net increase in net assets resulting from operations
  $ 7,551,627     $  
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
               
Purchases of investments
    (344,500,850 )      
Increase in payable for investments purchased
    37,697,605        
Proceeds from sales of investments
    38,806,238        
Net realized gain on investments
    (1,271,895 )      
Net change in unrealized appreciation on investments
    (1,523,521 )      
Net change in unrealized depreciation on foreign currency translation
    135,665        
Increase in short-term investments, net
    (2,997,951 )      
Proceeds from principal payments
    9,401,188        
Amortization of premium/discount - net
    (119,510 )      
Amortization of deferred financing cost
    35,276        
Increase in dividend and interest receivable
    (4,370,178 )      
Increase in receivable for investments sold
    (2,877,307 )      
Increase in principal receivable
    (508,986 )      
Decrease in receivable from advisors
    290,619       (39,307 )
Increase in other assets
    (730,792 )     (104,676 )
Increase in accrued investment advisory fees
    512,912        
Increase in accrued performance-based incentive fees
    356,120        
Increase in other liabilities
    680,532       33,606  
Net cash used in operating activities
    (263,433,208 )     (110,377 )
                 
Financing Activities:
               
Net proceeds from issuance of shares of common stock
    214,058,425       2,400,750  
Distributions paid
    (3,145,108 )      
Borrowings under credit facility
    52,600,000        
Net cash provided by financing activities
    263,513,317       2,400,750  
Effect of exchange rate changes on cash
    1,427        
Net increase in cash
    81,536       2,290,373  
Cash, beginning of period
          200,000  
Cash, end of period
  $ 81,536     $ 2,490,373  
                 
Supplemental disclosure of cash flow information and non-cash financing activities:
               
Cash paid during period for:
               
Interest
  $ 561,644     $  
Dividend distributions reinvested
  $ 3,348,013     $  
 
See notes to condensed consolidated financial statements.
 
 
5

Corporate Capital Trust, Inc. and Subsidiary
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
Maturity Date
 
Principal
Amount/
No. Shares
(b)
 
Cost (c)
   
Fair Value
   
% of Net
Assets
Non-Control/Non-Affiliate Investments(d)—142.9%
                           
ACCO Brands Corp.
 
Commercial  & Professional Services
 
Subordinated Debt(e)(f)(g)
 
6.75%
       
4/30/2020
 
$
1,603,000
   
$
1,632,650
   
$
1,691,165
     
0.6
%
Allen Systems Group, Inc.
 
Software & Services
 
Senior Debt(g)(h)(i)
 
L + 575
 
1.75
%
 
11/20/2015
   
5,611,037
     
5,358,541
     
5,470,761
     
1.9
%
Alliant Holdings I, Inc.
 
Insurance
 
Senior Debt(g)
 
L + 300
       
8/21/2014
   
84,076
     
77,716
     
82,658
     
0.0
%
       
Subordinated Debt(e)(g)
 
11.00%
       
5/1/2015
   
7,872,000
     
8,249,911
     
8,167,200
     
2.9
%
                                   8,327,627        8,249,858        2.9
%
Allison Transmission, Inc.
 
Automobiles & Components
 
Senior Debt(f)(g)
 
L + 350
       
8/7/2017
   
7,526
     
7,186
     
7,433
     
0.0
%
American Rock Salt Company, LLC
 
Materials
 
Senior Debt(g)
 
L + 425
 
1.25
%
 
4/25/2017
   
5,572,586
     
5,245,612
     
5,323,575
     
1.9
%
Amkor Technologies, Inc.
 
Semiconductors & Semiconductor Equipment
 
Subordinated Debt(f)(g)
 
7.38%
       
5/1/2018
   
213,000
     
210,638
     
221,254
     
0.1
%
Aramark Corp.
 
Commercial & Professional Services
 
Subordinated Debt(g)
 
8.50%
       
2/1/2015
   
2,863,000
     
2,938,327
     
2,931,025
     
1.0
%
Ardagh Packaging Holdings Ltd. (IE)(j)
 
Capital Goods
 
Senior Debt(e)(f)(g)
 
7.38%
       
10/15/2017
   
100,000
     
100,446
     
106,250
     
0.0
%
Aspect Software, Inc.
 
Technology Hardware & Equipment
 
Senior Debt(g)
 
10.63%
       
5/15/2017
   
9,009,000
     
9,531,217
     
9,549,540
     
3.4
%
Aspen Dental Management, Inc.
 
Health Care Equipment & Services
 
Senior Debt(g)
 
L + 550
 
1.50
%
 
10/6/2016
   
5,341,292
     
5,262,949
     
5,310,152
     
1.8
%
Asset Acceptance Capital Corp.
 
Diversified Financials
 
Senior Debt(f)(g)(i)
 
L + 725
 
1.50
%
 
11/14/2017
   
468,175
     
440,410
     
466,419
     
0.2
%
Asurion, LLC
 
Software & Services
 
Senior Debt(g)
 
L + 400
 
1.50
%
 
5/24/2018
   
3,285,425
     
3,238,172
     
3,273,351
     
1.2
%
     
Senior Debt(g)
 
L + 750
 
1.50
%
 
5/24/2019
   
888,852
     
888,852
     
908,576
     
0.3
%
     
 4,127,024
     
4,181,927
     
1.5
 %
Atlantic Broadband Finance, LLC
 
Media
 
Senior Debt(g)
 
L + 400
 
1.25
%
 
4/4/2019
   
360,245
     
361,135
     
361,743
     
0.1
%
Avaya, Inc.
 
Technology Hardware & Equipment
 
Senior Debt(e)(g)
 
7.00%
       
4/1/2019
   
9,555,000
     
9,009,824
     
8,862,262
     
3.1
%
Avis Budget Car Rental, LLC
 
Transportation
 
Senior Debt(f)(g)
 
L + 500
 
1.25
%
 
9/22/2018
   
156,716
     
153,844
     
157,136
     
0.1
%
AWAS Finance Luxembourg S.à r.l. (LU)(j)
 
Transportation
 
Senior Debt(f)(g)(h)
 
L + 400
 
1.25
%
 
7/16/2018
   
459,768
     
455,171
     
458,909
     
0.2
%
Bill Barrett Corp.
 
Energy
 
Subordinated Debt(f)(g)
 
7.63%
       
10/1/2019
   
251,000
     
257,019
     
251,000
     
0.1
%
BJ's Wholesale Club, Inc.
 
Food & Staples Retailing
 
Senior Debt(g)
 
L + 400
 
1.25
%
 
9/28/2018
   
1,107,732
     
1,057,790
     
1,112,579
     
0.4
%
Block Communications, Inc.
 
Media
 
Subordinated Debt(e)(g)
  7.25%        
2/1/2020
    108,000       111,202       109,620       0.0 %
BNY ConvergEX Group, LLC
 
Diversified Financials
 
Senior Debt(f)(g)
  L + 375   1.50 %  
12/19/2016
    110,144       108,855       106,749       0.0 %
     
Senior Debt(f)(g)
  L + 375   1.50 %  
12/19/2016
    250,758       247,823       243,027       0.1 %
     
Senior Debt(f)(g)
  L + 700   1.75 %  
12/17/2017
    1,386,716       1,380,083       1,317,380       0.5 %
     
Senior Debt(f)(g)
  L + 700   1.75 %  
12/17/2017
    581,872       579,089       552,779       0.2 %
        2,315,850       2,219,935       0.8 %
Boise Paper Holdings, LLC
 
Materials
 
Subordinated Debt(f)(g)
  9.00%        
11/1/2017
    146,000       154,189       161,330       0.1 %
 
See notes to condensed consolidated financial statements
6

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
 
Maturity Date
 
Principal
Amount/
No. Shares (b)
   
Cost (c)
   
Fair Value
   
% of Net
Assets
Bright Horizons Family Solutions, Inc.
 
Consumer Services
 
Senior Debt(g)
  L + 425   1.00 %  
5/23/2017
   $ 1,009,049      $ 1,004,060      $ 1,011,572       0.4 %
Building Materials Corporation Of America
 
Capital Goods
 
Subordinated Debt(e)(g)
  6.75%        
5/1/2021
    1,802,000       1,942,685       1,928,140       0.7 %
Cablevision Systems Corp.
 
Media
 
Subordinated Debt(f)(g)
  7.75%        
4/15/2018
    1,238,000       1,258,976       1,318,470       0.5 %
Caesars Entertainment Operating Co., Inc.
 
Consumer Services
 
Senior Debt(f)(g)
  L + 300        
1/28/2015
    12,730       11,813       11,898       0.0 %
     
Senior Debt(f)(g)
  11.25%        
6/1/2017
    1,018,000       1,073,750       1,110,893       0.4 %
        1,085,563       1,122,791       0.4 %
California Pizza Kitchen, Inc.
 
Food & Staples Retailing
 
Senior Debt(g)(i)
  L + 550   1.25 %  
7/7/2017
    4,316,622       4,271,270       4,295,039       1.5 %
Camp International Holding Co.
 
Software & Services
 
Senior Debt(g)(h)
  L + 525   1.25 %  
5/31/2019
    2,162,287       2,167,693       2,197,424       0.8 %
Catalina Marketing Corp.
 
Media
 
Senior Debt(g)
  L + 550        
9/29/2017
    8,431,567       8,349,479       7,966,313       2.8 %
       
Subordinated Debt(e)(g)
  10.50%        
10/1/2015
    11,121,000       10,961,138       10,787,370       3.8 %
        19,310,617       18,753,683       6.6 %
Cemex Materials, LLC
 
Materials
 
Subordinated Debt(f)(EUR)
  4.75%        
3/5/2014
  419,000       465,173       501,081       0.2 %
       
Subordinated Debt(e)(g)(i)
  7.70%        
7/21/2025
  $ 1,277,000       1,121,615       1,105,882       0.4 %
        1,586,788       1,606,963       0.6 %
Cequel Communications, LLC
 
Media
 
Subordinated Debt(e)(g)
  8.63%        
11/15/2017
    524,000       566,085       564,610       0.2 %
Ceridian Corp.
 
Software & Services
 
Senior Debt(e)(g)(h)
  8.88%        
7/15/2019
    2,123,000       2,123,000       2,191,997       0.8 %
Charter Communications Operating Holdings, LLC
 
Media
 
Subordinated Debt(f)(g)
  7.25%        
10/30/2017
    573,000       582,401       624,570       0.2 %
Chesapeake Energy Corp.
 
Energy
 
Subordinated Debt(f)(g)
  L + 700  
1.50
%  
12/2/2017
   
2,331,000
     
2,261,871
     
2,314,718
     
0.8
%
CHS / Community Health Systems, Inc.
 
Health Care Equipment & Services
 
Subordinated Debt(f)(g)
  8.00%        
11/15/2019
    905,000       913,684       963,825       0.3 %
     
Subordinated Debt(f)(g)
  8.88%        
7/15/2015
    520,000       527,947       533,650       0.2 %
        1,441,631       1,497,475       0.5 %
Citco III, Ltd.(IE)
 
Diversified Financials
 
Senior Debt(f)(g)(h)
  L + 425   1.25 %  
6/29/2018
    3,361,553       3,355,919       3,327,937       1.2 %
ClubCorp Club Operations, Inc.
 
Consumer Services
 
Senior Debt(g)
  L + 450   1.50 %  
11/30/2016
    136,400       129,529       137,337       0.0 %
Commscope, Inc.
 
Technology Hardware & Equipment
 
Subordinated Debt(e)(g)
  8.25%        
1/15/2019
    632,000       667,901       668,340       0.2 %
Continental Airlines, Inc.
 
Transportation
 
Senior Debt(f)(g)
  7.34%        
4/19/2014
    357,706       362,028       362,177       0.1 %
       
Senior Debt(f)(g)
  8.31%        
4/2/2018
    680,669       676,331       693,431       0.2 %
        1,038,359       1,055,608       0.3 %
CRC Health Corp.
 
Health Care Equipment & Services
 
Senior Debt(g)(h)
  L + 450        
11/16/2015
    1,199,199       1,137,049       1,107,760       0.4 %
     
Subordinated Debt(g)
  10.75%        
2/1/2016
    1,114,000       1,069,968       980,320       0.3 %
        2,207,017       2,088,080       0.7 %
Cricket Communications, Inc.
 
Telecommunication Services
 
Senior Debt(f)(g)
  7.75%        
5/15/2016
    1,563,000       1,576,051       1,658,734       0.6 %
Data Device Corp.
 
Capital Goods
 
Senior Debt(g)(h)
  L + 950   1.25 %  
7/11/2019
    8,000,000       7,840,000       7,880,000       2.8 %
       
Senior Debt(g)(h)
  L + 600   1.50 %  
7/11/2018
    7,935,356       7,776,649       7,895,679       2.8 %
        15,616,649       15,775,679       5.6 %
DineEquity, Inc.
 
Consumer Services
 
Senior Debt(f)(g)
  L + 300   1.25 %  
10/19/2017
    67,867       65,339       67,711       0.0 %
 
See notes to condensed consolidated financial statements
 
7

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
 
Maturity Date
 
Principal
Amount /
No. Shares (b)
   
Cost (c)
   
Fair Value
 
% of Net     
Assets    
DJO Finance, LLC
 
Health Care Equipment & Services
 
Senior Debt(g)
  L + 500   1.25 %  
9/15/2017
  $ 1,984,560     $ 1,987,040     1,975,044     0.7 %
     
Senior Debt(e)(g)
  8.75%        
3/15/2018
    475,000       492,506       484,500     0.2 %
        2,479,546       2,459,544     0.9 %
DuPont Fabros Technology, LP
 
Real Estate
 
Subordinated Debt(f)(g)
 
8.50%
       
12/15/2017
   
100,000
     
106,163
     
110,000
     0.0 %
E*Trade Financial Corp.
 
Diversified Financials
 
Subordinated Debt(f)(g)
  6.75%        
6/1/2016
    11,000       11,076       11,193     0.0 %
      Subordinated Debt(f)(g)    7.88%        
12/1/2015
    1,269,000       1,265,096       1,288,035     0.5 %
       
Subordinated Debt(f)(g)
  12.50%        
11/30/2017
    839,000       951,752       961,704     0.3 %
        2,227,924       2,260,932     0.8 %
Easton-Bell Sports, Inc.
 
Consumer Durables & Apparel
 
Senior Debt(g)
  9.75%        
12/1/2016
    1,190,000       1,268,495       1,304,537     0.5 %
Education Management, LLC
 
Consumer Services
 
Senior Debt(f)(g)
  L + 700   1.25 %  
3/30/2018
    7,116,982       6,909,448       6,885,681     2.4 %
     
Subordinated Debt(f)(g)
  8.75%        
6/1/2014
    3,978,000       3,929,860       3,540,420     1.2 %
       
10,839,308
       10,426,101      3.6
%
Emergency Medical Services Corp.
 
Health Care Equipment & Services
 
Senior Debt(g)
  L + 375   1.50 %  
5/25/2018
    3,372,952       3,373,415       3,345,547     1.2 %
Express, LLC / Express Finance Corp.
 
Retailing
 
Subordinated Debt(f)(g)
  8.75%        
3/1/2018
    43,000       46,035       46,440     0.0 %
Fidelity National Information Services, Inc.
 
Software & Services
 
Subordinated Debt(f)(g)
  7.63%        
7/15/2017
    26,000       27,230       28,665     0.0 %
     
Subordinated Debt(f)(g)
  7.88%        
7/15/2020
    114,000       122,777       128,250     0.0 %
         150,007      
156,915
      %
First American Payment Systems, L.P.
 
Software & Services
 
Senior Debt(g)(i)
  L + 500   1.75 %  
11/1/2016
    1,334,495       1,321,587       1,338,665     0.5 %
FleetPride Corp.
 
Capital Goods
 
Senior Debt(g)
  L + 550   1.25 %  
12/6/2017
    831,395       829,361       834,513     0.3 %
Freedom Group
 
Consumer Durables & Apparel
 
Senior Debt(e)(g)
  7.88%        
5/1/2020
    359,000       366,895       374,258     0.1 %
FTI Consulting, Inc.
 
Diversified Financials
 
Subordinated Debt(f)(g)
  6.75%        
10/1/2020
    87,000       86,824       91,785     0.0 %
GCI, Inc.
 
Telecommunication Services
 
Subordinated Debt(g)(h)
  8.63%        
11/15/2019
    5,931,000       6,300,964       6,212,722     2.2 %
Generac Power System, Inc.
 
Capital Goods
 
Senior Debt(f)(g)(h)
  L + 500   1.25 %  
5/30/2018
    2,618,227       2,566,371       2,615,779     0.9 %
Genesys Telecommunications Laboratories, Inc.
 
Software & Services
 
Common Stocks(i)*
             N/A      448,908       448,908        480,331     0.2
%
     
Subordinated Debt(i)(EUR)
  12.50%        
1/31/2020
 
2,044,000       2,628,371       2,567,280     0.9 %
        3,077,279      
3,047,611
   
1.1
%
Good Sam Enterprises, LLC
 
Media
 
Senior Debt(g)
  11.50%        
12/1/2016
  $ 10,105,000       10,386,957       10,521,831     3.7 %
Goodman Global, Inc.
 
Capital Goods
 
Senior Debt(g)
  L + 700   2.00 %  
10/30/2017
    1,246,673       1,253,894       1,266,620     0.4 %
Great Lakes Dredge & Dock Corp.
 
Capital Goods
 
Subordinated Debt(f)(g)
  7.38%        
2/1/2019
    711,000       726,698       711,000     0.2 %
Guitar Center, Inc.
 
Retailing
 
Senior Debt(g)
  L + 525        
4/9/2017
    12,238,739       11,406,405       11,489,055     4.0 %
 
See notes to condensed consolidated financial statements
 
8

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
Maturity Date
 
Principal Amount /
No. Shares (b)
   
Cost (c)
   
Fair Value
% of Net
Assets
Harbor Freight Tools USA, Inc.
 
Capital Goods
 
Senior Debt(g)
  L + 425   1.25 %  
11/14/2017
  $ 5,008,978     $ 4,966,418     $ 4,999,586       1.8 %
Hilcorp Energy I LP
 
Energy
 
Subordinated Debt(e)(f)(g)
  7.63%        
4/15/2021
    390,000       422,768       415,350       0.1 %
       
Subordinated Debt(e)(f)(g)
  8.00%        
2/15/2020
    1,659,000       1,778,719       1,787,572       0.6 %
        2,201,487       2,202,922       0.7 %
HUB International, Ltd.
 
Insurance
 
Senior Debt(g)
  L + 450        
6/13/2017
    5,116,443       5,072,940       5,085,744       1.8 %
       
Senior Debt(g)
  L + 475   2.00 %  
12/13/2017
    330,671       330,671       332,325       0.1 %
       
Subordinated Debt(e)(g)
  9.00%        
12/15/2014
    12,001,000       12,255,120       12,166,014       4.3 %
       
Subordinated Debt(e)(g)
  10.25%        
6/15/2015
    300,000       301,816       305,625       0.1 %
        17,960,547       17,889,708       6.3 %
Hubbard Radio, LLC
 
Media
 
Senior Debt(g)
  L + 375   1.50 %  
4/28/2017
    549,939       546,215       549,939       0.2 %
       
Senior Debt(g)
  L + 725   1.50 %  
4/30/2018
    8,630,233       8,676,446       8,662,596       3.0 %
        9,222,661       9,212,535       3.2 %
Husky Injection Molding Systems, Ltd. (CA)(j)
 
Capital Goods
 
Senior Debt(f)(g)
  L + 525   1.25 %  
6/29/2018
    5,536,366       5,510,229       5,575,121       2.0 %
Immucor, Inc.
 
Health Care Equipment & Services
 
Senior Debt(g)
  L + 575   1.50 %  
8/19/2018
    2,516,082       2,520,129       2,534,172       0.9 %
Ineos US Finance, LLC (UK)(j)
 
Materials
 
Senior Debt(e)(f)(g)
  9.00%        
5/15/2015
    70,000       73,641       73,850       0.0 %
Intelsat Jackson Holdings SA
 
Media
 
Subordinated Debt(f)(g)
  7.25%        
4/1/2019
    6,173,000       6,142,264       6,481,650       2.3 %
Interactive Data Corp.
 
Diversified Financials
 
Senior Debt(g)
  L + 325   1.25 %  
2/11/2018
    17,629       17,287       17,373       0.0 %
iPayment, Inc.
 
Software & Services
 
Senior Debt(g)
  L + 425   1.50 %  
5/8/2017
    1,910,441       1,890,099       1,919,401       0.7 %
     
Subordinated Debt(g)
  10.25%        
5/15/2018
    4,013,000       3,786,116       3,651,830       1.3 %
        5,676,215       5,571,231       2.0 %
IPC Systems, Inc.
 
Technology Hardware & Equipment
 
Senior Debt(g)
  L + 525        
7/31/2017
    4,032,030       3,966,644       3,936,169       1.4 %
J. Crew Group, Inc.
 
Retailing
 
Subordinated Debt(g)
  8.13%        
3/1/2019
    1,471,000       1,396,718       1,518,807       0.5 %
Jo-Ann Stores, Inc.
 
Retailing
 
Senior Debt(g)
  L + 350   1.25 %  
3/16/2018
    22,883       22,678       22,642       0.0 %
Kerling PLC (UK)(j)
 
Materials
 
Senior Debt(e)(f)(h)(EUR)
  10.63%        
2/1/2017
  5,353,000       6,565,362       5,961,311       2.1 %
Kinetic Concepts, Inc.
 
Health Care Equipment & Services
 
Senior Debt(g)
  L + 525   1.25 %  
11/4/2016
  $ 1,313,471       1,308,022       1,321,135       0.5 %
     
Senior Debt(g)
  L + 575   1.25 %  
5/4/2018
    1,961,860       1,973,146       1,981,478       0.7 %
     
Senior Debt(e)(g)(h)
  10.50%        
11/1/2018
    6,816,000       6,943,375       7,156,800       2.5 %
        10,224,543       10,459,413       3.7 %
Lawson Software, Inc.
 
Software & Services
 
Subordinated Debt(e)(g)
  11.50%        
7/15/2018
    4,549,000       4,996,912       5,140,370       1.8 %
Liz Claiborne Inc
 
Consumer Durables & Apparel
 
Senior Debt(e)(f)(g)
  10.50%        
4/15/2019
    1,735,000       1,854,769       1,930,187       0.7 %
Local TV Finance, LLC
 
Media
 
Senior Debt(g)
  L + 400        
5/7/2015
    370,225       356,462       367,293       0.1 %
Lord & Taylor Holdings, LLC
 
Consumer Durables & Apparel
 
Senior Debt(g)
  L + 450   1.25 %  
1/11/2019
    100,656       101,409       100,855       0.0 %
McJunkin Red Man Corp.
 
Energy
 
Senior Debt(g)
  9.50%        
12/15/2016
    3,393,000       3,376,264       3,664,440       1.3 %
 
See notes to condensed consolidated financial statements
 
9

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
 
Maturity Date
 
Principal
Amount /
No. Shares (b)
   
Cost (c)
   
Fair Value
   
% of Net
Assets
MedAssets, Inc.
 
Health Care Equipment & Services
 
Senior Debt(f)(g)
  L + 375   1.50 %  
11/16/2016
  $ 778,609     $ 780,548     $ 782,140       0.3 %
     
Subordinated Debt(f)(g)
  8.00%        
11/15/2018
    489,000       490,314       515,895       0.2 %
        1,270,862       1,298,035       0.5 %
MetroPCS Wireless, Inc.
 
Telecommunication Services
 
Subordinated Debt(f)(g)
  7.88%        
9/1/2018
    1,762,000       1,839,738       1,828,075       0.6 %
Michaels Stores, Inc.
 
Retailing
 
Senior Debt(g)
  L + 450        
7/31/2016
    681,714       668,461       682,495       0.2 %
Misys PLC
 
Software & Services
 
Senior Debt(f)(g)(h)
  L + 600   1.25 %  
12/12/2018
    1,419,814       1,386,093       1,393,491       0.5 %
       
Senior Debt(f)(g)(h)
  12.00%        
6/12/2019
    2,819,283       2,758,349       2,771,116       1.0 %
        4,144,442       4,164,607       1.5 %
Momentive Performance Materials USA, Inc.
 
Materials
 
Senior Debt(g)
  L + 350        
5/5/2015
    536,881       516,269       521,923       0.2 %
       
Senior Debt(e)(g)
  10.00%        
10/15/2020
    1,380,000       1,380,000       1,383,450       0.5 %
        1,896,269       1,905,373       0.7 %
Mueller Water Products, Inc.
 
Capital Goods
 
Subordinated Debt(f)(g)
  7.38%        
6/1/2017
    1,034,000       882,640       1,034,000       0.4 %
NBTY, Inc.
 
Household & Personal Products
 
Senior Debt(g)
  L + 325   1.00 %  
10/1/2017
    26,355       26,056       26,361       0.0 %
New Enterprise Stone & Lime Co., Inc.
 
Capital Goods
 
Senior Debt(e)(g)
 
4.00%,
9.00% PIK
       
3/15/2018
    6,002,000       6,002,000       5,941,980       2.1 %
Newport Television, LLC
 
Media
 
Senior Debt(g)(h)
  L + 675   3.00 %  
9/14/2016
    12,687,680       12,799,327       12,735,258       4.5 %
Nexstar Broadcasting, Inc.
 
Media
 
Senior Debt(g)
  8.88%        
4/15/2017
    170,000       177,250       179,563       0.1 %
NPC International, Inc.
 
Consumer Services
 
Senior Debt(g)
  L + 400   1.25 %  
12/28/2018
    1,639,867       1,640,631       1,640,547       0.6 %
NuSil Technology, LLC
 
Materials
 
Senior Debt(g)
  L + 400   1.25 %  
4/7/2017
    523,652       527,315       522,778       0.2 %
Nuveen Investments, Inc.
 
Diversified Financials
 
Senior Debt(f)(g)
  L + 550        
5/13/2017
    25,629       24,062       25,373       0.0 %
     
Senior Debt(f)(g)
  L + 600   1.25 %  
5/13/2017
    282,184       276,953       283,359       0.1 %
     
Senior Debt(f)(g)
  L + 700   1.25 %  
2/28/2019
    641,271       635,104       644,879       0.2 %
       
Subordinated Debt(f)(g)
  5.50%        
9/15/2015
    889,000       824,666       804,545       0.3 %
       
Subordinated Debt(f)(g)
  10.50%        
11/15/2015
    4,694,000       4,783,951       4,764,410       1.7 %
        6,544,736       6,522,566       2.3 %
Ocwen Financial Corp.
 
Banks
 
Senior Debt(f)(g)
  L + 550   1.50 %  
9/1/2016
    342,395       338,496       344,963       0.1 %
Office Depot, Inc.
 
Retailing
 
Senior Debt(e)(f)(g)
  9.75%        
3/15/2019
    3,260,000       3,241,994       3,170,350       1.1 %
Penn National Gaming, Inc.
 
Consumer Services
 
Subordinated Debt(f)(g)
  8.75%        
8/15/2019
    401,000       430,958       444,108       0.2 %
Petco Animal Supplies, Inc.
 
Retailing
 
Senior Debt(g)
  L + 325   1.25 %  
11/24/2017
    118,888       113,398       118,205       0.0 %
Pharmaceutical Product Development, Inc.
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Senior Debt(g)
  L + 500   1.25 %  
12/5/2018
    804,619       794,778       810,452       0.3 %
Pinnacle Foods Finance, LLC
 
Food & Staples Retailing
 
Senior Debt(g)
  L + 350        
10/2/2016
    544,948       530,478       540,523       0.2 %
Plains Exploration & Production Co.
 
Energy
 
Subordinated Debt(f)(g)
  6.13%        
6/15/2019
    8,000       7,801       8,040       0.0 %
 
See notes to condensed consolidated financial statements
 
10

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
Maturity Date
 
Principal
Amount /
No. Shares (b)
   
Cost (c)
   
Fair Value
   
% of Net
Assets
Prestige Brands, Inc.
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Senior Debt(f)(g)
  L + 400   1.25 %  
1/31/2019
  $ 99,479     $ 98,050     $ 100,109       0.0 %
     
Subordinated Debt(e)(f)(g)
  8.13%        
2/1/2020
    227,000       227,000       249,133       0.1 %
                                 
325,050
     
349,242
     
0.1
%
Rocket Software, Inc.
 
Software & Services
 
Senior Debt(g)
  L + 550   1.50 %  
2/8/2018
    1,931,029       1,950,207       1,930,431       0.7 %
Roofing Supply Group, LLC
 
Retailing
 
Senior Debt(g)
  L + 525   1.25 %  
5/31/2019
    89,738       89,963       90,000       0.0 %
Roundy's Supermarkets, Inc.
 
Food & Staples Retailing
 
Senior Debt(f)(g)
  L + 450   1.25 %  
2/13/2019
    1,293,085       1,274,475       1,297,242       0.5 %
Ryerson, Inc.
 
Materials
 
Senior Debt(g)
  L + 737.5        
11/1/2014
    98,000       97,450       93,590       0.0 %
       
Senior Debt(g)
  12.00%        
11/1/2015
    354,000       363,992       355,770       0.1 %
        461,442       449,360       0.1 %
Sabre, Inc.
 
Transportation
 
Senior Debt(e)(g)
  8.50%        
5/15/2019
    4,783,000       4,815,761       4,854,745       1.7 %
Savers, Inc.
 
Retailing
 
Senior Debt(g)(h)
  L + 500   1.25 %  
7/9/2019
    205,195       203,143       205,516       0.1 %
Schaeffler AG (DE)(j)
 
Automobiles & Components
 
Senior Debt(e)(f)(g)(h)
  L + 475   1.25 %  
1/27/2017
    3,086,176       3,095,518       3,091,962       1.1 %
     
Senior Debt(e)(f)(g)
  8.50%        
2/15/2019
    5,000       5,400       5,338       0.0 %
        3,100,918       3,097,300       1.1 %
Scitor Corp.
 
Capital Goods
 
Senior Debt(g)
  L + 350   1.50 %  
2/15/2017
    22,336       22,288       21,953       0.0 %
Sedgwick Claims Management Services Holdings, Inc.
 
Insurance
 
Senior Debt(g)(i)
  L + 350   1.50 %  
12/31/2016
    112,869       107,642       111,599       0.0 %
       
Senior Debt(g)(i)
  L + 750   1.50 %  
5/30/2017
    1,338,888       1,316,348       1,332,193       0.4 %
        1,423,990       1,443,792       0.4 %
Sinclair Television Group, Inc.
 
Media
 
Subordinated Debt(f)(g)
  8.38%        
10/15/2018
    27,000       28,285       29,430       0.0 %
Skilled Healthcare Group, Inc.
 
Health Care Equipment & Services
 
Senior Debt(f)(g)
  L + 525   1.50 %  
4/9/2016
    14,945       14,565       14,664       0.0 %
SNL Financial, LLC
 
Commercial & Professional Services
 
Senior Debt(g)(i)
  L + 700   1.50 %  
8/17/2018
    2,281,115       2,299,200       2,281,115       0.8 %
Solera Holdings, Inc.
 
Software & Services
 
Subordinated Debt(e)(f)(g)
  6.75%        
6/15/2018
    4,461,000       4,641,983       4,695,202       1.7 %
Solutia, Inc.
 
Materials
 
Subordinated Debt(f)(g)
  7.88%        
3/15/2020
    120,000       126,063       140,400       0.0 %
Sophia, LP
 
Software & Services
 
Senior Debt(g)
  L + 500   1.25 %  
7/19/2018
    405,189       399,427       408,270       0.1 %
Sports Authority, Inc.
 
Retailing
 
Senior Debt(g)
  L + 600   1.50 %  
11/16/2017
    1,405,960       1,361,951       1,356,752       0.5 %
Springleaf Financial Funding Co.
 
Diversified Financials
 
Senior Debt(f)(g)
  L + 425   1.25 %  
5/10/2017
    2,551,580       2,294,550       2,409,878       0.8 %
SSI Investments II, Ltd.
 
Software & Services
 
Subordinated Debt(g)
  11.13%        
6/1/2018
    1,422,000       1,507,617       1,596,195       0.6 %
Standard Chartered Bank (SG)(j)
 
Banks
 
Subordinated Debt(e)(f)(i)(k)
  L + 1600        
4/1/2014
    3,310,000       3,339,219       3,387,123       1.2 %
Styron S.A.R.L., LLC (LU)(j)
 
Materials
 
Senior Debt(f)(g)(h)
  L + 450   1.50 %  
8/2/2017
    4,173,356       3,916,918       3,920,450       1.4 %
Terex Corp.
 
Capital Goods
 
Subordinated Debt(f)(g)
  6.50%        
4/1/2020
    1,130,000       1,162,231       1,144,125       0.4 %
The Gymboree Corp.
 
Retailing
 
Senior Debt(g)(h)
  L + 350   1.50 %  
2/23/2018
    6,804,801       6,390,807       6,456,973       2.3 %
       
Subordinated Debt(g)
  9.13%        
12/1/2018
    1,172,000       1,001,806       1,087,030       0.4 %
        7,392,613       7,544,003       2.7 %
 
See notes to condensed consolidated financial statements
 
11

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
Company (a)
 
Industry
 
Investments
 
Interest
Rate
 
LIBOR
Floor
 
Maturity Date
 
Principal
Amount /
No. Shares (b)
   
Cost (c)
   
Fair Value
   
% of Net
Assets
The Neiman Marcus Group, Inc.
 
Retailing
 
Senior Debt(g)
  L + 350   1.25 %  
5/16/2018
  $ 188,713     $ 182,118     $ 186,956       0.1 %
       
Subordinated Debt(g)
  10.38%        
10/15/2015
    1,967,000       2,032,031       2,040,782       0.7 %
        2,214,149       2,227,738       0.8 %
The SI Organization, Inc.
 
Capital Goods
 
Senior Debt(g)
  L + 325   1.25 %  
11/22/2016
    186,958       176,070       184,153       0.1 %
The TelX Group, Inc.
 
Telecommunication Services
 
Senior Debt(g)
  L + 650   1.25 %  
9/25/2017
    654,768       660,325       653,131       0.2 %
TL Acquisitions, Inc.
 
Media
 
Subordinated Debt(e)(g)
  10.50%        
1/15/2015
    1,696,000       1,274,800       1,288,960       0.5 %
       
Senior Debt(e)(g)
  11.50%        
4/15/2020
    8,311,000       8,407,870       8,601,885       3.0 %
        9,682,670       9,890,845       3.5 %
TowerCo Finance, LLC
 
Real Estate
 
Senior Debt
  L + 350   1.00 %  
2/2/2017
    30,180       29,621       30,306       0.0 %
Towergate Finance PLC (UK)(j)
 
Insurance
 
Subordinated Debt(e)(f)(GBP)
  10.50%        
2/15/2019
  ₤  125,000       172,073       170,319       0.1 %
TransUnion, LLC
 
Diversified Financials
 
Subordinated Debt(g)
  11.38%        
6/15/2018
  $ 1,403,000       1,550,724       1,650,279       0.6 %
Triple Point Technology, Inc.
 
Software & Services
 
Senior Debt(g)(i)
  L + 650   1.50 %  
10/27/2017
    199,563       192,239       201,559       0.1 %
Univar, Inc.
 
Materials
 
Senior Debt(g)
  L + 350   1.50 %  
6/30/2017
    958,043       931,177       942,365       0.3 %
Verisure Holding AB (SE)(j)
 
Commercial & Professional Services
 
Senior Debt(e)(f)(EUR)
  8.75%        
9/1/2018
  397,000       482,309       482,307       0.2 %
Vision Solutions, Inc.
 
Commercial & Professional Services
 
Senior Debt(g)(i)
  L + 450   1.50 %  
7/23/2016
  $ 1,406,250       1,392,015       1,403,437       0.5 %
VWR Funding, Inc.
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Senior Debt(g)
  L + 425        
4/28/2017
    146,834       139,860       145,136       0.1 %
     
Subordinated Debt(g)
 
10.25%  CASH
or 11.25%  PIK
       
7/15/2015
    7,271,000       7,496,900       7,489,130       2.6 %
                              7,636,760      
7,634,266
     
2.7
%
Warner Chilcott Co., LLC
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Subordinated Debt(f)(g)
  7.75%        
9/15/2018
    1,225,000       1,219,168       1,313,812       0.5 %
Wastequip, LLC
 
Materials
 
Senior Debt(g)(h)
  L + 675   1.50 %  
1/5/2018
    11,284,413       11,002,302       11,227,991       4.0 %
West Corp.
 
Software & Services
 
Senior Debt
  L + 425        
7/15/2016
    4,974       4,835       4,962       0.0 %
     
Subordinated Debt(g)(h)
  7.88%        
1/15/2019
    1,575,000       1,559,289       1,645,875       0.6 %
     
Subordinated Debt(g)(h)
  8.63%        
10/1/2018
    5,840,000       6,043,929       6,190,400       2.2 %
        7,608,053       7,841,237       2.8 %
Wm. Bolthouse Farms, Inc.
 
Food, Beverage & Tobacco
 
Senior Debt(g)
 
L + 750
 
2.00
%
 
8/11/2016
 
 
500,000
   
 
499,639
   
 
502,000
     
0.2
%
Zayo Group, LLC
 
Telecommunication Services
 
Senior Debt(g)
 
L + 550
 
1.50
%
 
12/1/2016
   
2,925,557
     
2,894,296
     
2,939,585
     
1.0
%
     
Senior Debt(g)
 
10.25%
       
3/15/2017
   
2,005,000
     
2,138,174
     
2,233,069
     
0.8
%
   
5,032,470
     
5,172,654
     
1.8
%
Total Non-Control/Non-Affiliate Investments
 
403,796,075
     
405,798,107
     
142.9
%
Short Term Investments—3.7%
                                     
Goldman Sachs Financial Square Funds - Prime Obligations Fund
 
Short Term Investments(g)
0.13% (l)
       
N/A
   
10,039,443
     
10,039,443
     
10,039,443
     
3.5
%
State Street Institutional Liquid Reserves Fund
 
Short Term Investments
0.20% (l)
       
N/A
   
673,260
     
673,260
     
673,260
     
0.2
%
Total Short Term Investments
 
10,712,703
     
10,712,703
     
3.7
%
TOTAL INVESTMENTS —146.6%(m)
$
414,508,778
     
416,510,810
     
146.60
%
LIABILITIES IN EXCESS OF OTHER ASSETS—(46.6%)
         
(132,484,500
)
   
(46.60
)%
NET ASSETS—100.0%
       
$
284,026,310
     
100.00
%
See notes to condensed consolidated financial statements
 
12

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (unaudited)(continued)
As of June 30, 2012
 
*
Non-income producing security.
(a)
Security may be an obligation of one or more entities affiliated with the named company.
(b)
Denominated in U.S. Dollars unless otherwise noted.
(c)
Represents amortized cost for debt securities and cost for common stock.
(d)
Non-Control/Non-Affiliate investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”) as investments that are neither Control Investments nor Affiliate Investments. Controlled investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Controlled investments.
(e)
This security was acquired in a transaction that was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Rule 144A thereunder. This security may be resold only in transactions that are exempt from the registration requirements of the Securities Act, normally to qualified institutional buyers.
(f)
The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act.  As of June 30, 2012, the portfolio held 23.3% of non-qualifying assets under the 1940 Act, as a percentage of total assets, as defined in Section 55(a) of the 1940 Act.
(g)
Security or portion thereof held within CCT Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank.
(h)
Position or portion thereof unsettled as of June 30, 2012.
(i)
Fair value was determined by the Company’s Board of Directors (see Note 2).
(j)
A portfolio company domiciled in a foreign country.
(k)
A portfolio company investment structured as a credit-linked floating rate note.
(l)
7-day effective yield as of June 30, 2012.
(m)
As of June 30, 2012, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $4,930,213; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $2,928,181; the net unrealized appreciation was $2,002,032; the aggregate cost of securities for Federal income tax purposes was $414,508,778.
 
Abbreviations:
     
CA - Canada
     
DE - Germany
     
EUR - Euro; principal amount is denominated in Euro currency
 
GBP - British Pound Sterling; principal amount is denominated in Pound Sterling
   
IE - Ireland
     
L = LIBOR - London Interbank Offered Rate, typically 3-Month
     
LU - Luxembourg
     
PIK - Payment-in-kind
     
SE - Sweden
     
SG - Singapore
     
UK - United Kingdom
     
 
See notes to condensed consolidated financial statements
 
13

Corporate Capital Trust, Inc. and Subsidiary
As of December 31, 2011
Company (b)
 
Industry (c)
 
Investments
 
Interest
Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No. Shares (m)
   
Cost (d)
   
Fair Value
   
% of Net  
Assets
Non-Control/Non-Affiliate Investments(a)—163.6%
                                               
Alliant Holdings I, Inc.
 
Insurance
 
Senior Debt(e)
 
L + 300
 
 
   
8/21/2014
  
   $
85,889
  
 
$
78,083
  
 
$
83,689
  
 
0.1%  
Allison Transmission, Inc.
 
Automobiles & Components
 
Senior Debt(e)
 
L + 250
 
 
   
8/7/2014
  
   
7,564
  
   
7,018
  
   
7,389
  
 
0.0%  
Ally Financial, Inc.
 
Banks
 
Preferred Stocks(e)(f)
                   
5,575
  
   
99,595
  
   
102,524
  
 
0.2%  
Amkor Technologies, Inc.
 
Semiconductors & Semiconductor Equipment
 
Subordinated Debt(e)(f)
 
7.38%
 
 
   
5/1/2018
  
   
208,000
  
   
205,404
  
   
212,680
  
 
0.3%  
Aramark Corp.
 
Commercial & Professional Services
 
Subordinated Debt(e)
 
8.50%
 
 
   
2/1/2015
  
   
1,187,000
  
   
1,222,134
  
   
1,216,675
  
 
1.9%  
Aspect Software, Inc.
 
Technology Hardware & Equipment
 
Subordinated Debt(e)
 
10.63%
 
 
   
5/15/2017
  
   
1,484,000
  
   
1,529,365
  
   
1,539,650
  
 
2.4%  
Aspen Dental Management, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(g)
 
L + 450
 
1.50%
   
10/6/2016
  
   
155,886
  
   
150,857
  
   
151,989
  
 
0.2%  
Asset Acceptance Capital Corp.
 
Diversified Financials
 
Senior Debt(e)(f)(h)
 
L + 725
 
1.50%
   
11/14/2017
  
   
480,179
  
   
449,331
  
   
463,373
  
 
0.7%  
Associated Materials, LLC
 
Capital Goods
 
Senior Debt(e)
 
9.13%
 
 
   
11/1/2017
  
   
13,000
  
   
13,184
  
   
11,343
  
 
0.0%  
Avaya, Inc.
 
Technology Hardware & Equipment
 
Senior Debt(e)(g)
Senior Debt(e)(g)
 
L + 275
L + 450
 
 
   
10/24/2014
10/26/2017
  
  
   
1,142,373
974,527
  
  
   
1,067,943
883,793
  
  
   
1,095,010
890,474
  
  
 
1.7%   1.4%  
                                   
1,951,736
  
   
1,985,484
  
 
3.0%  
Avis Budget Car Rental, LLC
 
Transportation
 
Senior Debt(e)(f)
 
L + 500
 
1.25%
   
9/22/2018
  
   
276,675
  
   
271,282
  
   
278,837
  
 
0.4%  
BJ’s Wholesale Club, Inc.
 
Food & Staples Retailing
 
Senior Debt(e)
 
L + 575
 
1.25%
   
9/28/2018
  
   
1,113,299
  
   
1,093,129
  
   
1,118,164
  
 
1.7%  
Boise Paper Holdings, LLC
 
Materials
 
Subordinated Debt(e)(f)
 
9.00%
 
 
   
11/1/2017
  
   
146,000
  
   
154,801
  
   
156,950
  
 
0.2%  
Cablevision Systems Corp.
 
Media
 
Subordinated Debt(e)(f)
 
7.75%
 
 
   
4/15/2018
  
   
426,000
  
   
431,245
  
   
451,560
  
 
0.7%  
Caesars Entertainment Operating Co., Inc.
 
Consumer Services
 
Senior Debt(e)(g)
 
L + 300
 
 
   
1/28/2015
  
   
12,797
  
   
11,723
  
   
11,157
  
 
0.0%  
   
Senior Debt(e)
 
11.25%
 
 
   
6/1/2017
  
   
1,070,000
  
   
1,135,422
  
   
1,135,537
  
 
1.7%  
                                     
1,147,145
  
   
1,146,694
  
 
1.8%  
California Pizza Kitchen, Inc.
 
Food & Staples Retailing
 
Senior Debt(e)(g)(h)
 
L + 550
 
1.25%
   
7/7/2017
  
   
1,068,431
  
   
1,023,743
  
   
1,041,721
  
 
1.6%  
Calpine Corp.
 
Utilities
 
Senior Debt(e)(f)(g)
 
L + 325
 
1.25%
   
4/1/2018
  
   
68,276
  
 
 
65,451
  
 
 
67,090
  
 
0.1%  
CDW, LLC
 
Technology Hardware & Equipment
  Senior Debt(e)   L + 350          10/10/2014       1,229,473      
1,201,984
     
1,194,316
   
1.8% 
 
   
Subordinated Debt(e)
 
 11.50%  CASH
       
10/12/2015
     
135,000
     
142,433
     
141,750
   
0.2%  
           or 12.50% PIK                        
1,344,417
     
1,336,066
    2.1%  
Cengage Learning Acquisitions, Inc.
 
Media
 
Senior Debt(e)(g)
 
L + 225
 
 
   
7/3/2014
  
   
1,954,781
  
   
1,624,504
  
   
1,670,243
  
 
2.6%  
Ceridian Corp.
 
Software & Services
 
Senior Debt(e)(g)
 
L + 300
 
 
   
11/10/2014
  
   
1,793,378
  
   
1,652,772
  
   
1,621,330
  
 
2.5%  
Charter Communications Operating Holdings, LLC
 
Media
 
Subordinated Debt(e)(f)
 
7.25%
 
 
   
10/30/2017
  
   
573,000
  
   
583,128
  
   
603,799
  
 
0.9%  
CHS / Community Health Systems, Inc.
 
Health Care Equipment & Services
 
Subordinated Debt(e)(f)
 
8.88%
 
 
   
7/15/2015
  
   
433,565
  
   
439,405
  
   
447,656
  
 
0.7%  
Citco III, Ltd. (IE)(i)
 
Diversified Financials
 
Senior Debt(e)(f)(g)
 
L + 500
 
1.25%
   
6/29/2018
  
   
17,307
  
   
17,349
  
   
16,572
  
 
0.0%  
ClubCorp Club Operations, Inc.
 
Consumer Services
 
Senior Debt(e)(g)
 
L + 450
 
1.50%
   
11/30/2016
  
   
137,092
  
   
129,554
  
   
136,864
  
 
0.2%  
Continental Airlines, Inc.
 
Transportation
 
Senior Debt(e)(f)
 
8.31%
 
 
   
4/2/2018
  
   
691,761
  
   
686,329
  
   
672,738
  
 
1.0%  
CRC Health Corp.
 
Health Care Equipment & Services
  Senior Debt(e)    L + 450         11/16/2015       973,846       926,057       883,766     1.4%  
     
Subordinated Debt(e)
   10.75%        
2/1/2016
     
1,114,000
     
1,065,237
     
1,058,300
    1.6%  
                                   
1,991,294
     
1,942,066
    3.0%  

See notes to condensed consolidated financial statements.
 
14

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (continued)
As of December 31, 2011

Company (b)
 
Industry (c)
 
Investments
 
Interest
Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No. Shares (m)
   
Cost (d)
   
Fair Value
   
% of Net  
Assets  
Cricket Communications, Inc.
 
Telecommunication Services
 
Senior Debt(e)(f)
 
7.75%
       
5/15/2016
  
  $
1,529,000
  
 
1,541,150
  
 
1,578,692
  
 
2.4%  
Datatel, Inc.
 
Software & Services
 
Senior Debt(e)
Senior Debt(e)
Senior Debt(e)(g)
 
L + 350
L + 725
L + 525
 
1.50%
1.50% 1.50%
   
2/20/2017
2/19/2018
9/15/2018
  
  
  
   
556,984
150,000
406,204
  
  
  
   
554,944
153,568
400,111
  
  
  
   
557,750
150,750
406,840
  
  
  
 
0.9%  
0.2%  
0.6%  
                                   
1,108,623
  
   
1,115,340
  
 
1.7%  
DineEquity, Inc.
 
Consumer Services
 
Senior Debt(e)(f)(g)
 
L + 300
 
1.25%
   
10/19/2017
  
   
75,685
  
   
72,728
  
   
74,791
  
 
0.1%  
DuPont Fabros Technology, LP
 
Real Estate
 
Subordinated Debt(e)(f)
 
8.50%
       
12/15/2017
  
   
100,000
  
   
106,616
  
   
107,000
  
 
0.2%  
E*TRADE Financial Corp.
 
Diversified Financials
 
Subordinated Debt(e)(f)
 
7.88%
       
12/1/2015
  
   
1,269,000
  
 
 
1,264,604
  
 
 
1,275,345
  
 
2.0%  
Easton-Bell Sports, Inc.
 
Consumer Durables & Apparel
 
Senior Debt(e)
 
9.75%
       
12/1/2016
  
   
1,190,000
  
   
1,275,766
  
   
1,297,100
  
 
2.0%  
Education Management, LLC
 
Consumer Services
 
Subordinated Debt(e)(f)
 
8.75%
       
6/1/2014
  
   
1,728,000
  
   
1,732,881
  
   
1,732,320
  
 
2.7%  
Emergency Medical Services Corp.
 
Health Care Equipment & Services
 
Senior Debt(e)(g)
 
L + 375
 
1.50%
   
5/25/2018
  
   
216,967
  
   
205,433
  
   
211,814
  
 
0.3%  
Express, LLC / Express Finance Corp.
 
Retailing
 
Subordinated Debt(e)(f)
 
8.75%
       
3/1/2018
  
   
43,000
  
   
46,248
  
   
46,547
  
 
0.1%  
Fidelity National Information Services, Inc.
 
 
Software & Services
 
Subordinated Debt(e)(f)
Subordinated Debt(e)(f)
 
7.63%
7.88%
        7/15/2017
7/15/2020
      46,000
122,000
      48,686
130,244
       49,795
131,760
   
0.1%  
0.2% 
                                 
178,930
     
181,555
    0.3%  
Fifth Third Processing Solutions, LLC
 
Software & Services
 
Senior Debt(e)(g)
 
L + 325
 
1.25%
   
11/3/2016
  
   
61,304
  
   
59,554
  
   
61,258
  
 
0.1%  
FTI Consulting, Inc.
 
Diversified Financials
 
Subordinated Debt(e)(f)
 
6.75%
       
10/1/2020
  
   
87,000
  
   
86,817
  
   
89,827
  
 
0.1%  
GCI, Inc.
 
Telecommunication Services
 
Subordinated Debt(e)
 
8.63%
       
11/15/2019
  
   
2,294,000
  
   
2,438,105
  
   
2,434,507
  
 
3.7%  
General Nutrition Centers, Inc.
 
Retailing
 
Senior Debt(e)(f)
 
L + 300
 
1.25%
   
3/2/2018
  
   
23,369
  
   
23,370
  
   
23,029
  
 
0.0%  
Good Sam Enterprises, LLC
 
Media
 
Senior Debt(e)
 
11.50%
       
12/1/2016
  
   
1,375,000
  
   
1,343,093
  
   
1,347,500
  
 
2.1%  
Goodman Global, Inc.
 
Capital Goods
 
Senior Debt(e)(g)
 
L + 700
 
2.00%
   
10/30/2017
  
   
948,221
  
   
952,962
  
   
954,541
  
 
1.5%  
Great Lakes Dredge & Dock Corp.
 
Capital Goods
 
Subordinated Debt(e)(f)
 
7.38%
       
2/1/2019
  
   
96,000
  
   
94,738
  
   
95,040
  
 
0.1%  
Guitar Center, Inc.
 
Retailing
 
Senior Debt(e)(g)
 
L + 525
 
 
   
4/9/2017
  
   
4,238,739
  
   
3,716,872
  
   
3,736,449
  
 
5.7%  
The Gymboree Corp.
 
Retailing
 
Senior Debt(e)(g)
Subordinated Debt(e)
 
L + 350
9.13%
    1.50%      2/23/2018
12/1/2018
       904,502
748,000
       847,281
609,721
       807,607
654,500
   
1.2%  
1.0% 
                                       1,457,002        1,462,107     2.2%  
High Plains Broadcasting Operating Co.
 
Media
 
Senior Debt(g)
 
L + 675
 
3.00%
   
9/14/2016
  
   
351,687
  
   
347,295
  
   
349,561
  
 
0.5%  
HUB International, Ltd.
 
Insurance
 
Senior Debt(e)(g)
 
L + 250
 
2.00%
   
6/13/2014
  
   
1,134,886
  
   
1,088,373
  
   
1,089,139
  
 
0.5%  
     
Senior Debt(e)(g)
 
L + 475
 
 
   
6/13/2014
  
   
332,350
  
 
 
332,350
  
 
 
331,283
  
 
1.7%  
                                   
1,420,723
  
   
1,420,422
  
 
2.2%  
Hubbard Radio, LLC
 
Media
 
Senior Debt(e)(g)
 
L + 375
 
1.50%
   
4/28/2017
  
   
606,123
  
   
601,661
  
   
598,359
  
 
0.9%  
       
Senior Debt(e)(g)
 
L + 725
 
1.50%
   
4/30/2018
  
   
2,834,070
  
   
2,819,267
  
   
2,798,644
  
 
4.3%  
                                     
3,420,928
  
   
3,397,003
  
 
5.2%  
 
See notes to condensed consolidated financial statements.
 
15

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (continued)
As of December 31, 2011

Company (b)
 
Industry (c)
 
Investments
 
Interest
Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No. Shares (m)
   
Cost (d)
   
Fair Value
   
% of Net  
Assets  
Husky Injection Molding Systems, Ltd. (CA)(i)
 
Capital Goods
 
Senior Debt(e)(f)(g)
 
L + 525
 
1.25%
   
6/29/2018
  
  $
1,159,646
  
 
1,149,330
  
 
1,159,194
  
 
1.8%  
Immucor, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(g)
 
L + 575
 
1.50%
   
8/19/2018
  
   
2,528,757
  
   
2,533,137
  
   
2,547,407
  
 
3.9%  
Ineos Holdings, Ltd. (UK)(i)
 
Materials
 
Subordinated Debt(f)(g) (EUR) 
 
E + 600 PIK
 
3.00%
   
6/16/2015
  
 
889,214
  
   
1,109,884
  
   
1,061,432
  
 
1.6%  
Infor Enterprise Solutions Holdings, Inc.
 
Software & Services
 
Senior Debt(e)(g)
 
L + 575
       
7/28/2015
  
  $
1,610,000
  
   
1,541,287
  
   
1,521,450
  
 
2.3%  
Interactive Data Corp.
 
Diversified Financials
 
Senior Debt(e)(g)
 
L + 325
 
1.25%
   
2/11/2018
  
   
18,262
  
   
17,899
  
   
18,037
  
 
0.0%  
iPayment, Inc.
 
Software & Services
 
Senior Debt(e)(g)
 
L + 425
 
1.50%
   
5/8/2017
  
   
1,953,798
  
   
1,931,324
  
   
1,932,629
  
 
3.0%  
   
Subordinated Debt(e)(j)
 
10.25%
       
5/15/2018
  
   
415,000
  
   
375,604
  
   
390,100
  
 
0.6%  
                                     
2,306,928
  
   
2,322,729
  
 
3.6%  
IPC Systems, Inc.
 
Technology Hardware & Equipment
 
Senior Debt(e)(g)
 
L + 225
 
 
   
6/2/2014
  
   
4,855
  
   
4,515
  
   
4,535
  
 
0.0%  
J. Crew Group, Inc.
 
Retailing
 
Senior Debt(e)(g)
 
L + 350
 
1.25%
   
3/7/2018
  
   
2,765,351
  
   
2,588,677
  
   
2,604,366
  
 
4.0%  
     
Subordinated Debt(e)
 
8.13%
       
3/1/2019
  
   
1,026,000
  
   
963,411
  
   
979,830
  
 
1.5%  
                                   
3,552,088
  
   
3,584,196
  
 
5.5%  
Jo-Ann Stores, Inc.
 
Retailing
 
Senior Debt(e)
 
L + 350
 
1.25%
   
3/16/2018
  
   
23,488
  
   
23,262
  
   
22,453
  
 
0.0%  
Kinetic Concepts, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(f)
 
L + 525
 
1.25%
   
11/4/2016
  
   
329,847
  
   
320,184
  
   
329,642
  
 
0.5%  
   
Senior Debt(e)(f)(g)
 
L + 575
 
1.25%
   
5/4/2018
  
   
375,178
  
 
 
366,342
  
 
 
379,071
  
 
0.6%  
                                 
686,526
  
   
708,713
  
 
1.1%  
Lamar Media Corp.
 
Media
 
Subordinated Debt(e)(f)
 
6.63%
       
8/15/2015
  
   
206,000
  
   
206,000
  
   
210,120
  
 
0.3%  
Lawson Software, Inc.
 
Software & Services
 
Senior Debt(e)
 
L + 525
 
1.50%
   
7/5/2017
  
   
1,766,446
  
   
1,735,811
  
   
1,726,542
  
 
2.6%  
Local TV Finance, LLC
 
Media
 
Senior Debt(e)
 
L + 200
 
 
   
5/7/2013
  
   
370,225
  
   
352,992
  
   
358,191
  
 
0.5%  
The Manitowoc Co., Inc.
 
Capital Goods
 
Subordinated Debt(e)(f)
 
9.50%
       
2/15/2018
  
   
21,000
  
   
22,983
  
   
22,365
  
 
0.0%  
McJunkin Red Man Corp.
 
Energy
 
Senior Debt(e)
 
9.50%
       
12/15/2016
  
   
3,393,000
  
   
3,374,953
  
   
3,443,895
  
 
5.3%  
MedAssets, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(f)(g)
 
L + 375
 
1.50%
   
11/16/2016
  
   
699,792
  
   
699,730
  
   
698,742
  
 
1.1%  
     
Subordinated Debt(e)(f)
 
8.00%
 
 
   
11/15/2018
  
   
316,000
  
   
311,267
  
   
309,680
  
 
0.5%  
                                   
1,010,997
  
   
1,008,422
  
 
1.5%  
MetroPCS Wireless, Inc.
 
Telecommunication Services
 
Subordinated Debt(e)(f)
 
7.88%
       
9/1/2018
  
   
281,000
  
   
284,117
  
   
284,864
  
 
0.4%  
Michaels Stores, Inc.
 
Retailing
 
Senior Debt(e)
 
L + 225
       
10/31/2013
  
   
215,942
  
   
202,264
  
   
212,726
  
 
0.3%  
     
Senior Debt(e)(g)
 
L + 450
       
7/31/2016
  
   
681,714
  
   
667,113
  
   
671,659
  
 
1.0%  
                                     
869,377
  
   
884,385
  
 
1.4%  
Momentive Performance Materials USA, Inc.
 
Materials
 
Senior Debt(e)(g)
 
L + 350
       
5/5/2015
  
   
1,212,164
  
   
1,161,622
  
   
1,158,623
  
 
1.8%  
Mondrian Investment Partners, Ltd. (UK)(i)
 
Diversified Financials
 
Senior Debt(e)(f)(g)
 
L + 425
 
1.25%
   
7/12/2018
  
   
488,020
  
   
484,049
  
   
488,020
  
 
0.7%  
Mueller Water Products, Inc.
 
Capital Goods
 
Subordinated Debt(e)(f)
 
7.38%
       
6/1/2017
  
   
1,034,000
  
   
871,542
  
   
940,940
  
 
1.4%  
   
Subordinated Debt(e)(f)
 
8.75%
       
9/1/2020
  
   
250,000
  
   
253,683
  
   
271,562
  
 
0.4%  
                                   
1,125,225
  
   
1,212,502
  
 
1.9%  
 
See notes to condensed consolidated financial statements.
 
16

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (continued)
As of December 31, 2011
 
Company (b)
 
Industry (c)
 
Investments
 
Interest
Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No. Shares (m)
   
Cost (d)
   
Fair Value
   
% of Net  
Assets  
N.E.W. Holdings I, LLC
 
Software & Services
 
Senior Debt(e)
 
L + 425
 
1.75%
   
3/23/2016
  
  $
8,655
  
 
8,250
  
 
8,407
  
 
0.0%  
   
Subordinated Debt(e)(h)
 
L + 750
 
2.00%
   
3/23/2017
  
   
998,480
  
   
986,123
  
   
963,533
  
 
1.5%  
                                 
994,373
  
   
971,940
  
 
1.5%  
NBTY, Inc.
 
Household & Personal Products
 
Senior Debt(e)(g)
 
L + 325
 
1.00%
   
10/1/2017
  
   
26,355
  
 
$
26,031
  
 
$
26,126
  
 
0.0%  
The Neiman Marcus Group, Inc.
 
Retailing
 
Senior Debt(e)
 
L + 350
 
1.25%
   
5/16/2018
  
   
188,713
  
   
181,660
  
   
182,344
  
 
0.3%  
     
Subordinated Debt(e)
 
10.38%
       
10/15/2015
  
   
1,967,000
  
   
2,040,359
  
   
2,043,241
  
 
3.1%  
                                     
2,222,019
  
   
2,225,585
  
 
3.4%  
Nexstar Broadcasting, Inc.
 
Media
 
Senior Debt(e)(f)
 
8.88%
       
4/15/2017
  
   
170,000
  
   
177,868
  
   
174,250
  
 
0.3%  
NPC International, Inc.
 
Consumer Services
 
Senior Debt(e)(g)
 
L + 525
 
1.50%
   
11/7/2018
  
   
1,515,463
  
   
1,519,252
  
   
1,521,146
  
 
2.3%  
NuSil Technology, LLC
 
Materials
 
Senior Debt(e)(g)
 
L + 400
 
1.25%
   
4/7/2017
  
   
25,312
  
   
25,312
  
   
24,848
  
 
0.0%  
Nuveen Investments, Inc.
 
Diversified Financials
 
Senior Debt(e)(f)
 
L + 300
       
11/13/2014
  
   
25,629
  
   
25,290
  
   
24,556
  
 
0.0%  
   
Senior Debt(e)(f)
 
L + 550
       
5/13/2017
  
   
133,224
  
   
130,890
  
   
128,395
  
 
0.2%  
     
Senior Debt(e)(f)(g)
 
L + 600
 
1.25%
   
5/13/2017
  
   
282,184
  
   
276,540
  
   
278,891
  
 
0.4%  
       
Subordinated Debt(e)(f)
 
10.50%
       
11/15/2015
  
   
1,715,000
  
   
1,671,568
  
   
1,702,137
  
 
2.6%  
                                     
2,104,288
  
   
2,133,979
  
 
3.3%  
Ocwen Financial Corp.
 
Banks
 
Senior Debt(e)(f)(g)
 
L + 550
 
1.50%
   
9/1/2016
  
   
1,400,877
  
   
1,381,333
  
   
1,380,359
  
 
2.1%  
Penn National Gaming, Inc.
 
Consumer Services
 
Subordinated Debt(e)(f)
 
8.75%
       
8/15/2019
  
   
401,000
  
   
432,531
  
   
436,087
  
 
0.7%  
Petco Animal Supplies, Inc.
 
Retailing
 
Senior Debt(e)
 
L + 325
 
1.25%
   
11/24/2017
  
   
120,101
  
   
114,129
  
   
117,280
  
 
0.2%  
Pharmaceutical Product Development, Inc.
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Senior Debt(e)(f)(g)
 
L + 500
 
1.25%
   
12/5/2018
  
   
808,662
  
   
798,202
  
   
804,938
  
 
1.2%  
Pinnacle Entertainment, Inc.
 
Consumer Services
 
Subordinated Debt(e)(f)
 
8.63%
       
8/1/2017
  
   
167,000
  
   
176,491
  
   
176,602
  
 
0.3%  
Pinnacle Foods Finance, LLC
 
Food & Staples Retailing
 
Senior Debt(e)(g)
 
L + 250
       
4/2/2014
  
   
547,748
  
   
530,579
  
   
537,133
  
 
0.8%  
Realogy Corp.
 
Real Estate
 
Senior Debt(e)
 
L + 425
 
 
   
10/10/2016
  
   
1,566,113
  
   
1,379,558
  
   
1,403,269
  
 
2.2%  
     
Senior Debt(e)
 
L - 15
       
10/10/2016
  
   
123,163
  
   
108,445
  
   
110,357
  
 
0.2%  
                                     
1,488,003
  
   
1,513,626
  
 
2.3%  
Ryerson, Inc.
 
Materials
 
Senior Debt(e)(f)
 
L + 737.5
 
 
   
11/1/2014
  
   
98,000
  
   
97,346
  
   
90,160
  
 
0.1%  
       
Senior Debt(e)(f)
 
12.00%
       
11/1/2015
  
   
44,000
  
 
 
46,519
  
 
 
44,440
  
 
0.1%  
                                     
143,865
  
   
134,600
  
 
0.2%  
Sabre, Inc.
 
Transportation
 
Senior Debt(e)(g)
 
L + 200
 
 
   
9/30/2014
  
   
3,257,513
  
   
2,788,750
  
   
2,704,632
  
 
4.2%  
SandRidge Energy, Inc.
 
Energy
 
Subordinated Debt(e)(f)
 
L + 362.5
 
 
   
4/1/2014
  
   
23,000
  
   
22,952
  
   
22,352
  
 
0.0%  
Scitor Corp.
 
Capital Goods
 
Senior Debt(e)(g)
 
L + 350
 
1.50%
   
2/15/2017
  
   
23,310
  
   
23,255
  
   
22,203
  
 
0.0%  
Sedgwick Claims Management Services Holdings, Inc.
 
Insurance
 
Senior Debt(e)(g)(h)
 
L + 350
 
1.50%
   
12/31/2016
  
   
113,219
  
   
107,480
  
   
111,662
  
 
0.2%  
   
Senior Debt(e)(h)
 
L + 750
 
1.50%
   
5/30/2017
  
   
907,195
  
   
882,412
  
   
898,123
  
 
1.4%  
                                   
989,892
  
   
1,009,785
  
 
1.5%  
 
See notes to condensed consolidated financial statements.
 
17

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (continued)
As of December 31, 2011
 
Company (b)
 
Industry (c)
 
Investments
 
Interest Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No.
Shares
 (m)
   
Cost (d)
   
Fair Value
   
% of Net  
Assets  
Sheridan Holdings, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(g)
 
L + 225
       
6/13/2014
  
 
348,178
  
 
321,180
  
 
329,899
  
 
0.5%  
The SI Organization, Inc.
 
Capital Goods
 
Senior Debt(e)(g)
 
L + 325
 
1.25%
   
11/22/2016
  
   
187,907
  
   
175,980
  
   
177,572
  
 
0.3%  
Sinclair Television Group, Inc.
 
Media
 
Subordinated Debt(e)(f)
 
8.38%
 
 
   
10/15/2018
  
   
27,000
  
   
28,364
  
   
27,877
  
 
0.0%  
Skilled Healthcare Group, Inc.
 
Health Care Equipment & Services
 
Senior Debt(e)(f)(g)
 
L + 375
 
1.50%
   
4/9/2016
  
   
16,179
  
   
15,723
  
   
15,125
  
 
0.0%  
SNL Financial, LC
 
Commercial & Professional Services
 
Senior Debt(e)(g)(h)
 
L + 700
 
1.50%
   
8/17/2018
  
   
709,520
  
   
712,180
  
   
707,746
  
 
1.1%  
Solutia, Inc.
 
Materials
 
Subordinated Debt(e)(f)
 
7.88%
       
3/15/2020
  
   
120,000
  
   
126,355
  
   
130,500
  
 
0.2%  
The Sports Authority, Inc.
 
Retailing
 
Senior Debt(e)(g)
 
L + 600
 
1.50%
   
11/16/2017
  
   
1,413,097
  
   
1,366,092
  
   
1,367,171
  
 
2.1%  
Springleaf Financial Funding Co.
 
Diversified Financials
 
Senior Debt(e)(f)(g)
 
L + 425
 
1.25%
   
5/10/2017
  
   
2,551,580
  
   
2,275,043
  
   
2,230,502
  
 
3.4%  
Sprint Nextel Corp.
 
Telecommunication Services
 
Subordinated Debt(e)(f)
 
8.38%
       
8/15/2017
  
   
664,000
  
   
574,028
  
   
595,110
  
 
0.9%  
SSI Investments II, Ltd.
 
Software & Services
 
Subordinated Debt(e)
 
11.13%
       
6/1/2018
  
   
1,422,000
  
   
1,512,863
  
   
1,503,765
  
 
2.3%  
Symphony / IRI Group, Inc.
 
Commercial & Professional Services
 
Senior Debt(e)(g)
 
L + 375
 
1.25%
   
12/1/2017
  
   
20,023
  
   
19,610
  
   
19,914
  
 
0.0%  
The TelX Group, Inc.
 
Telecommunication Services
 
Senior Debt(e)(g)
 
L + 650
 
1.25%
   
9/25/2017
  
   
333,726
  
 
$
314,266
  
 
$
333,726
  
 
0.5%  
TowerCo Finance, LLC
 
Real Estate
 
Senior Debt
 
L + 375
 
1.50%
   
2/2/2017
  
   
30,333
  
   
29,710
  
   
30,345
  
 
0.0%  
TransUnion, LLC
 
Diversified Financials
 
Subordinated Debt(e)
 
11.38%
       
6/15/2018
  
   
1,403,000
  
   
1,559,885
  
   
1,602,927
  
 
2.5%  
Triple Point Technology, Inc.
 
Software & Services
 
Senior Debt(e)
 
L + 650
 
1.50%
   
10/27/2017
  
   
200,566
  
   
192,696
  
   
201,067
  
 
0.3%  
Univar, Inc.
 
Materials
 
Senior Debt(e)(g)
 
L + 350
 
1.50%
   
6/30/2017
  
   
962,906
  
   
933,677
  
   
931,010
  
 
1.4%  
Vision Solutions, Inc.
 
Commercial & Professional Services
 
Senior Debt(e)(h)
 
L + 450
 
1.50%
   
7/23/2016
  
   
1,443,750
  
   
1,427,658
  
   
1,429,312
  
 
2.2%  
VWR Funding, Inc.
 
Pharmaceuticals, Biotechnology & Life Sciences
  Senior Debt(e)(g)   L + 250          6/30/2014       147,590        136,713        140,358     0.2%  
   
Subordinated Debt(e)
  10.25%CASH or        
7/15/2015
       3,051,000        3,155,464        3,150,157      4.8%  
         11.25% PIK                          3,292,177        3,290,515     5.0%  
Warner Chilcott Co., LLC
 
Pharmaceuticals, Biotechnology & Life Sciences
 
Subordinated Debt(e)(f)
 
7.75%
       
9/15/2018
  
   
1,225,000
  
   
1,218,819
  
   
1,251,031
  
 
1.9%  
West Corp.
 
Software & Services
 
Senior Debt
 
L + 425
       
7/15/2016
  
   
5,000
  
   
4,846
  
   
4,979
  
 
0.0%  
     
Subordinated Debt(e)(g)
 
7.88%
       
1/15/2019
  
   
1,743,000
  
   
1,730,393
  
   
1,729,927
  
 
2.7%  
     
Subordinated Debt(e)
 
8.63%
       
10/1/2018
  
   
2,600,000
  
   
2,646,996
  
   
2,626,000
  
 
4.0%  
                                     
4,382,235
  
   
4,360,906
  
 
6.7%  
Wm. Bolthouse Farms, Inc.
 
Food, Beverage & Tobacco
 
Senior Debt(e)
 
L + 750
 
2.00%
   
8/11/2016
  
   
500,000
  
   
499,608
  
   
498,905
  
 
0.8%  
Zayo Group, LLC
 
Telecommunication Services
 
Senior Debt(e)(g)
 
L + 550
 
1.50%
   
12/1/2016
  
   
2,749,427
  
   
2,715,285
  
   
2,740,835
  
 
4.2%  
   
Senior Debt(e)(g)
 
10.25%
       
3/15/2017
  
   
1,549,000
  
   
1,649,012
  
   
1,653,557
  
 
2.5%  
                                   
4,364,297
  
   
4,394,392
  
 
6.7% 
 
See notes to condensed consolidated financial statements.
 
18

Corporate Capital Trust, Inc. and Subsidiary
Condensed Consolidated Schedule of Investments (continued)
As of December 31, 2011
 
Company (b)
 
Industry (c)
 
Investments
 
Interest
Rate
 
EURIBOR/
LIBOR
Floor
 
Maturity
Date
   
Principal
Amount / No.
Shares
 (m)
   
Cost (d)
   
Fair Value
   
% of Net
Assets
Total Non-Control/Non-Affiliate Investments
                                 
$
106,111,246
  
 
$
106,589,757
  
 
163.6%
Short Term Investments—11.8%
                                                   
Goldman Sachs Financial Square Funds - Prime Obligations Fund
     
Short Term Investments(e)
 
0.11%(k)
       
NA
  
   
6,541,055
  
   
6,541,055
  
   
6,541,055
  
 
10.0%
State Street Institutional Liquid Reserves Fund
 
Short Term Investments
 
0.15%(k)
       
NA
  
   
1,173,697
  
   
1,173,697
  
   
1,173,697
  
 
1.8%
Total Short Term Investments
                                   
7,714,752
  
   
7,714,752
  
 
11.8%
TOTAL INVESTMENTS —175.4%(l)
                                 
$
113,825,998
  
   
114,304,509
  
 
175.4%
LIABILITIES IN EXCESS OF OTHER ASSETS—(75.4%)
                                       
(49,141,780
 
-75.4%
NET ASSETS—100.0%
                                         
$
65,162,729
  
 
100.0%
 
(a)
Non-Control/Non-Affiliate investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”) as investments that are neither Control Investments nor Affiliate Investments. Controlled investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Controlled investments.
(b)
Security may be an obligation of one or more entities affiliated with the named company.
(c)
Unaudited.
(d)
Represents amortized cost for debt securities and cost for preferred stock.
(e)
Security or portion thereof held within CCT Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank.
(f)
The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act.
(g)
Position or portion thereof unsettled as of December 31, 2011.
(h)
Fair value was determined by the Company’s Board of Directors (see Note 2).
(i)
A portfolio company domiciled in a foreign country.
(j)
This security was acquired in a transaction that was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Rule 144A thereunder. This security may be resold only in transactions that are exempt from the registration requirements of the Securities Act, normally to qualified institutional buyers.
(k)
7-day effective yield as of December 31, 2011.
(l)
As of December 31, 2011, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $971,241; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $492,730; the net unrealized appreciation was $478,511; the aggregate cost of securities for Federal income tax purposes was $113,825,998.
(m)
Denominated in U.S. Dollars unless otherwise noted.
 
Abbreviations:
CA - Canada
EUR - Euros; principal amount is denominated in Euros currency
E = EURIBOR - Euro Interbank Offered Rate
IE - Ireland
L = LIBOR - London Interbank Offered Rate, typically 3-month rate
PIK - Payment-in-kind
UK - United Kingdom
 
See notes to condensed consolidated financial statements.
 
19

 
 
CORPORATE CAPITAL TRUST, INC. AND SUBSIDIARY

1.
Principal Business and Organization

Corporate Capital Trust, Inc. (the “Company”) was incorporated under the general corporation laws of the State of Maryland on June 9, 2010. The Company is a non-diversified closed-end management investment company and it is regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “40 Act”). The Company’s investment objective is to provide its shareholders with current income and, to a lesser extent, long-term capital appreciation, by investing primarily in the debt of privately owned U.S. companies with a focus on originated transactions sourced through the networks of its advisors.

The Company is externally managed by CNL Fund Advisors Company (“CNL”) and KKR Asset Management LLC (“KKR”) (collectively the “Advisors”), which are responsible for sourcing potential investments, analyzing and conducting due diligence on prospective investment opportunities, structuring investments and monitoring the Company’s investment portfolio on an ongoing basis. Both Advisors are registered as investment advisers with the Securities and Exchange Commission (“SEC”). CNL also provides the administrative services necessary for the Company to operate.

The Company is currently selling shares of its common stock pursuant to a registration statement on Form N-2 (as amended and supplemented, the “Registration Statement”) and it is offering to sell, on a continuous basis, shares of common stock for approximately $1.6 billion (150 million shares at an offering price of $10.85 per share) (the “Offering”). The Registration Statement was declared effective by the SEC on April 4, 2011 and the Company commenced its Offering. The Company commenced business operations on June 17, 2011 and it commenced investment operations on July 1, 2011.

As of June 30, 2012, the Company had one wholly owned financing subsidiary, CCT Funding LLC (“CCT Funding”), which was established on July 15, 2011 for the purpose of arranging a secured, revolving credit facility with a bank and to borrow money to invest in portfolio companies.

2.
Significant Accounting Policies

Basis of Presentation and Principles of Consolidation - The accompanying financial statements of the Company are prepared in accordance with the instructions to Form 10-Q and accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods, have been included. The results of operations for interim periods are not indicative of results to be expected for the full year.

Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the SEC on March 16, 2012. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany account balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, (ii) the reported amounts of income and expenses during the reported period and (iii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Actual results could differ from those estimates.

Cash and Cash Equivalents - Cash and cash equivalents consist of demand deposits, repurchase agreements, foreign currency, and highly liquid investments with original maturities of three months or less.

Valuation of Investments - The Company measures the value of its investments in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure (“ASC Topic 820”), issued by the Financial Accounting Standards Board (“FASB”). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from independent pricing services, broker-dealers or market makers. With respect to the Company’s portfolio investments for which market quotations are not readily available, the Company’s board of directors, with the assistance of the Company’s Advisors and officers, is responsible for determining in good faith the fair value in accordance with the valuation policy approved by the board of directors. The board of directors will make this fair value determination on a quarterly basis and any other time when a decision regarding the fair value of the portfolio investments is required. A determination of fair value involves subjective judgments and estimates. Due to the inherent uncertainty of determining the fair value of portfolio investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 
20

 
 
ASC Topic 820 also defines hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, and the hierarchical levels are described as follows:

Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. Publicly listed equities, debt securities and publicly listed derivatives are generally included in Level 1. The Company does not adjust the quoted price for these investments. The Company's money market fund/short term investment funds and foreign currency are included in this category.

Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. In certain cases, debt and equity securities are valued on the basis of prices from orderly transactions for similar investments in active markets between market participants and provided by reputable dealers or independent pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices, market transactions in comparable investments, and various relationships between investments. Investments generally included in this category are corporate bonds and loans, convertible debt indexed to publicly listed securities, foreign currency forward contracts and certain over-the-counter derivatives.

Level 3 – Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant judgment or estimation. Investments generally included in this category are corporate bonds, corporate loans and common stock investments that lack observable market pricing.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment.

The Company has implemented Accounting Standard Update (“ASU”) No. 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“ASU 2011-04”), which amends the existing fair value guidance within ASC Topic 820.

Security Transactions, Realized/Unrealized Gains or Losses, and Income Recognition - Security transactions are recorded on a trade-date basis. The Company measures realized gains or losses from the repayment or sale of investments using the specific identification method. The amortized cost basis of investments includes (i) the original cost and (ii) adjustments for the accretion/amortization of market discounts and premiums, original issue discount and loan origination fees. The Company reports changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments in the condensed consolidated statement of operations.

Interest income is recorded on an accrual basis and includes amortization of premiums to par value and accretion of discounts to par value. Discounts and premiums to par value on securities purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. Premiums and discounts are determined based on the cash flows expected to be collected for a particular investment. Loan origination fees received in connection with the closing of investments are accreted over the contractual life of the loan based on the effective interest method as interest income. Upon prepayment of a loan or debt security, any prepayment penalties, unamortized loan origination fees, unamortized original issue discount, and unamortized market discounts are recorded as interest income.

The Company has investments in debt securities which contain a contractual payment-in-kind, or PIK, interest provision. If the borrower elects to pay, or is obligated to pay, PIK interest, and if deemed collectible in management’s judgment, then the PIK interest is computed at the contractual rate specified in the investment’s credit agreement, the computed PIK interest is added to the principal balance of the investment, and the computed PIK interest is recorded as interest income.

Loans or debt securities are placed on non-accrual status when principal or interest payments are at least 90 days past due or when there is reasonable doubt that principal or interest will be collected. Generally, accrued interest is reversed when a loan or a debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

Deferred Financing Costs - Deferred financing costs represent fees and other direct costs incurred in connection with arranging the Company’s borrowings. These amounts are initially recorded as deferred financing costs on the condensed consolidated statements of assets and liabilities and then subsequently amortized over the contractual term of the credit facility as interest expense.  Deferred financing costs are stated separately on the Company's condensed consolidated statements of assets and liabilities.

Paid In Capital - The Company records the proceeds from the sale of its common stock on a net basis to (i) capital stock and (ii) paid in capital in excess of par value, excluding all commissions and marketing support fees.

 
21

 
 
Foreign Currency Translation, Transactions and Gains/Losses - Foreign currency amounts are translated into U.S. dollars on the following basis: (i) at the exchange rate on the last business day of the reporting period for the fair value of investment securities, other assets and liabilities; and (ii) at the rates of exchange prevailing on the respective recording dates for the purchase and sale of investment securities, income, expenses, gains and losses.

Net assets and fair values are presented based on the applicable foreign exchange rates described above and the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held; therefore the fluctuations related to foreign exchange rate conversion are included with the net realized gain (loss) and unrealized appreciation (depreciation) on investments.

Net realized foreign exchange gains or losses arise from activity in foreign currency forward contracts, sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded by the Company and the U.S. dollar equivalent of the amounts actually received or paid by the Company. Unrealized appreciation (depreciation) from currency translation for foreign currency forward contracts and other receivables or payables is presented as net change in unrealized appreciation (depreciation) on foreign currency translation on the condensed consolidated statements of operations. Unrealized appreciation (depreciation) on foreign currency forward contracts is also reported as separate line items on the condensed consolidated statements of assets and liabilities.

Management Fees - The Company accrues for the base management fee (recorded as investment advisory fees) and performance-based incentive fees, including (i) a subordinated incentive fee on income and (ii) an incentive fee on capital gains. The Company records the liability for the incentive fee on capital gains based on a hypothetical liquidation of its investment portfolio at the end of each reporting period. Therefore the accrual for incentive fee on capital gains includes the recognition of incentive fee on both net realized gains and net unrealized appreciation, if any, although any such incentive fee associated with net unrealized appreciation is neither earned nor payable to the Advisors until net unrealized appreciation is realized as net realized gains. Additionally the determination of whether the accrued incentive fee associated with net realized gains is earned and payable to the Advisors can only be made at the end of the calendar year. The components of performance-based incentive fees are combined and expensed on the condensed consolidated statement of operations and accrued on the condensed consolidated statements of assets and liabilities as accrued performance-based incentive fees.

Organization and Offering Expenses - Organization expenses, including reimbursement payments to Advisors, are expensed on the Company’s condensed consolidated statement of operations. Continuous offering expenses, including reimbursement payments to Advisors, but excluding commission and marketing support fees, are accumulated monthly and capitalized on the condensed consolidated statements of assets and liabilities as deferred offering expenses and then subsequently expensed over a 12-month period.

Earnings per Share - Earnings per share is calculated based upon the daily weighted average number of shares of common stock outstanding during the reporting period.

Dividends and Distributions - Dividends and distributions are declared by the Company’s board of directors each calendar quarter and recognized as distribution liabilities on the ex-dividend date. The ex-dividend date for the Company’s common stock is the same as the record date. Net realized capital gains, if any, generally are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company has adopted a distribution reinvestment plan that provides for reinvestment of distributions on behalf of shareholders. Shareholders who have elected to participate in the distribution reinvestment plan will have their cash distribution automatically reinvested in additional shares of common stock at a price per share equivalent to the public offering price on the distribution payment date, net of commissions and marketing support fees, rather than receiving the cash distribution.

Federal Income Taxes - The Company has elected to be treated for federal income tax purposes, and intends to maintain its qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”). Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes at least 90% of “Investment Company Taxable Income,” as defined in the Code. The Company intends to distribute sufficient dividends to maintain its RIC status each year and it does not anticipate paying a material level of federal income taxes in the future.

The Company is also generally subject to nondeductible federal excise taxes if it does not distribute an amount at least equal to the sum (i) 98% of net ordinary income, (ii) 98.2% of the Company’s capital gains in excess of capital losses for the one-year period generally ending on October 31 of the calendar year and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which the Company paid no federal income tax. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this excess taxable income.
 
 
22

 
 
 3.           Investments

The Company is engaged in a strategy to invest primarily in the debt of privately owned U.S. companies. The primary investment concentrations include (i) senior debt securities and (ii) subordinated debt securities. The fair value of senior and subordinated debt investments will generally fluctuate with, among other things, changes in prevailing interest rates, the general supply of, and demand for, debt capital among private and public companies, general domestic and global economic conditions, the condition of certain financial markets, developments or trends in any particular industry and changes in the financial condition and credit quality of each security’s issuer.

Investment purchases, sales and principal payments/paydowns are summarized below for the three months and six months ended June 30, 2012.  These purchase and sale amounts exclude short-term investments (i.e. money market fund investments) purchase and sale transactions.  The Company did not hold any investments prior to July 1, 2011.

   
Three Months Ended
June 30, 2012
   
Six Months Ended
June 30, 2012
 
Investment purchases, at cost
  $ 208,485,240     $ 344,500,850  
Investment sales, proceeds
    17,265,916       38,811,976  
Principal payments/paydowns, proceeds
    7,028,546       9,401,188  
 
At June 30, 2012, none of the Company’s debt investments were on non-accrual status (in default).

As of June 30, 2012, the Company’s investment portfolio consisted of the following:
 
Asset Category
 
Cost
   
Fair Value
   
Percentage of
Portfolio
   
Percentage of
Net Assets
 
Senior debt securities
  $ 277,527,322     $ 278,812,226       68.7 %     98.2 %
Subordinated debt securities
    125,819,845       126,505,550       31.2       44.5  
Total debt securities
    403,347,167       405,317,776       99.9       142.7  
Common stock
    448,908       480,331       0.1       0.2  
Subtotal
    403,796,075       405,798,107       100.0 %     142.9  
Short term investments
    10,712,703       10,712,703               3.7  
Total investments
  $ 414,508,778     $ 416,510,810               146.6 %
 
At December 31, 2011, the Company’s investment portfolio consisted of the following:
 
Asset Category
 
Cost
   
Fair Value
   
Percentage of
Portfolio
   
Percentage of
Net Assets
 
Senior debt securities
  $ 71,398,157     $ 71,609,433       67.2 %     109.9 %
Subordinated debt securities
    34,613,494       34,877,800       32.7       53.5  
Total debt securities
    106,011,651       106,487,233       99.9       163.4  
Preferred stock
    99,595       102,524       0.1       0.2  
Subtotal
    106,111,246       106,589,757       100.0 %     163.6  
Short term investments
    7,714,752       7,714,752               11.8  
Total investments
  $ 113,825,998     $ 114,304,509               175.4 %
 
 
23

 

The industry composition, geographic dispersion, and local currencies of the Company's investment portfolio at fair value, excluding short-term investments, as of June 30, 2012 and December 31, 2011 was as follows:
 
Industry Composition
 
June 30, 2012
   
December 31, 2011
 
Media
    17.5 %     8.1 %
Software & Services
    12.4       14.6  
Capital Goods
    10.4       3.4  
Materials
    7.9       3.4  
Health Care Equipment & Services
    7.1       6.9  
Retailing
    7.0       12.6  
Insurance
    6.8       2.4  
Technology Hardware & Equipment
    5.7       4.6  
Diversified Financials
    4.7       7.8  
Telecommunication Services
    3.8       9.0  
Consumer Services
    3.7       4.9  
Remaining Industries
    13.0       22.3  
                 
Total
    100.0 %     100.0 %
                 
Geographic Dispersion (1)
               
United States
    94.3 %     97.4 %
United Kingdom
    1.5       1.5  
Canada
    1.4       1.1  
Luxembourg
    1.1        
Remaining Countries
    1.7    
<0.1
 
                 
Total
    100.0 %     100.0 %
                 
Local Currency
               
U.S. Dollar
    97.7 %     99.0 %
Euro
    2.3       1.0  
British Pound Sterling
 
<0.1
       
                 
Total
    100.0 %     100.0 %
 
(1)   The geographic dispersion is determined by the portfolio company’s country of domicile.

During the period ended June 30, 2012, the Company did not hold any non-controlled investments where it owned 5% or more of a portfolio company’s outstanding voting securities as investments in “affiliated” companies. In addition, the Company did not hold any investments in “controlled” companies where it owned more than 25% of a portfolio company’s outstanding voting securities.

4.           Foreign Currency Forward Contracts

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date (usually the security transaction settlement date) at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market exchange rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts; the Company attempts to limit counterparty risk by only dealing with creditworthy counterparties.

 
24

 
 
There were no open foreign currency forward contracts at December 31, 2011.  At June 30, 2012, the details of the Company's open foreign currency forward contracts were as follows:
 
Foreign Currency
 
Settlement Date
 
Amount and
Transaction
 
US$ Value at
 Settlement Date
   
US$ Value at
June 30, 2012
   
Unrealized
Appreciation/
 (Depreciation)
 
EUR
 
Nov. 29, 2012
 
5,300,000 Sold
  $ 6,644,080     $ 6,718,222     $ (74,142 )
EUR
 
Jan. 3, 2013
 
2,300,000 Sold
    2,917,964       2,916,812       1,152  
Total
          $ 9,562,044     $ 9,635,034     $ (72,990 )
 
5.
Fair Value of Financial Instruments

The Company’s investments were categorized in the fair value hierarchy as follows at June 30, 2012 and December 31, 2011:
 
   
June 30, 2012 
 
Investment Type
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Senior debt securities
  $     $ 261,911,439     $ 16,900,787     $ 278,812,226  
Subordinated debt securities
          119,445,265       7,060,285       126,505,550  
Common stock
                480,331       480,331  
Subtotal
          381,356,704       24,441,403       405,798,107  
Short term investments
    10,712,703                   10,712,703  
Total
  $ 10,712,703     $ 381,356,704     $ 24,441,403     $ 416,510,810  
  
Derivative Type
                       
Foreign currency forward contracts
  $     $ (72,990 )   $     $ (72,990 )

   
December 31, 2011 
 
Investment Type
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Senior debt securities
  $     $ 66,957,496     $ 4,651,937     $ 71,609,433  
Subordinated debt securities
          33,914,267       963,533       34,877,800  
Preferred stock
    102,524                   102,524  
Subtotal
    102,524       100,871,763       5,615,470       106,589,757  
Short term investments
    7,714,752                   7,714,752  
Total
  $ 7,817,276     $ 100,871,763     $ 5,615,470     $ 114,304,509  

 
25

 

At June 30, 2012, the Company held 13 distinct investment positions that were classified as Level 3, representing an aggregate fair value of $24,441,403 and 5.9% of the total investment portfolio. The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of June 30, 2012 were as follows:
 
Asset Group
   
Fair Value
   
Valuation Techniques (1)
 
Unobservable Input (2)
 
Range
(Weighted Average)
   
$
9,825,030
   
Broker Quotes
 
Mid price
 
98.875-100.3125 (99.725)
           
Broker Quotes
 
Mid price
 
97.5-101.0 (98.0)
Senior debt securities
             
Yield-to-maturity
 
6.1-8.4% (7.9%)
     
7,075,757
   
Market Comparables
 
Discount margin
 
524-771 bps (719 bps)
               
Net EBITDA multiple
 
 2.1-3.4x  (2.3x)
               
Illiquidity discount
 
0.6-1.0% (0.9%)
           
Broker Quotes
 
Bid price
 
102.33  (NA)
               
Yield
 
12.65-15.3% (14.2%)
           
Market Comparables
 
Discount margin
 
1115-1450 bps (1305 bps)
Subordinated debt securities
   
7,060,285 
       
Leverage EBITDA multiple
 
5.3x (NA)
               
Illiquidity discount
 
2% (NA)
           
Discounted Cash Flow
 
Weighted avg. cost of capital
 
12.0% (NA)
           
Trade Price Indexing
 
Index option adjusted spread
 
+53 bps (NA)
               
EBITDA multiple
 
13.9x (NA)
Common stock
   
480,331
   
Market Comparables
 
Illiquidity discount
 
15 % (NA)
           
Discounted Cash Flow
 
Weighted avg. cost of capital
 
12.8% (NA)
Total
 
$
24,441,403
       
 .
   
   
(1)
For the assets and investment that have more than one valuation technique, the Company may rely on the stated techniques individually or in the aggregate based on a weight ascribed to each valuation technique, ranging from 0 – 100%. Broker quotes obtained for valuation purposes are reviewed by the Company relative to other valuation techniques.
   
(2)
Weighted average amounts are based on the estimated fair values. If noted as NA, then the number of inputs is too few to compute the weighted average for the range.

The more significant unobservable inputs used in the fair value measurement of the Company’s senior and subordinated loan investments are quotes obtained from unaffiliated brokers. In the event that there are limited broker quotes, then the valuation process will further rely on the inputs from comparable investments and/or discounted cash flow analysis. Depending on the type of loan investment position held by the Company, the relative comparable value analysis may rely on any of (i) market yields, (ii) discount margin, (iii) illiquidity discount and (iv) leverage EBITDA multiples analysis to either confirm a single broker quote, or to generate a fair value in the absence of any broker quote.  Other significant unobservable inputs used in the fair value measurement of the Company’s investments are also disclosed in the table above.  Any significant increases or decreases in these unobservable inputs would result in significant increases or decreases in the fair value of the Company’s investments.

The following is a reconciliation for the three months ended June 30, 2012 of investments for which Level 3 inputs were used in determining fair value:
 
   
Senior Debt Securities
   
Subordinated Debt Securities
   
Common Stock
   
Total
 
Fair Value Balance as of April 1, 2012
  $ 8,560,560     $ 6,006,623     $ 448,908     $ 15,016,091  
Purchases
    10,487,336       1,120,486             11,607,822  
Sales
                       
Net realized gain
    338                   338  
Net change in unrealized appreciation (1)
    105,524       (67,137 )     31,423       69,810  
Principal reduction
    (2,258,210 )                 (2,258,210 )
Net discount accretion
    5,239       313             5,552  
Transfers into Level 3
                       
Fair Value Balance as of June 30, 2012
  $ 16,900,787     $ 7,060,285     $ 480,331     $ 24,441,403  
Change in net unrealized appreciation (depreciation) in investments still held as of June 30, 2012 (1)
  $ 124,738     $ (67,128 )   $ 31,423     $ 57,610  
 
(1)
Amount is included in the related amount on investments in the condensed consolidated statement of operations.
 
 
26

 
 
The following is a reconciliation for the six months ended June 30, 2012 of investments for which Level 3 inputs were used in determining fair value:
 
   
Senior Debt Securities
   
Subordinated Debt Securities
   
Common Stock
   
Total
 
Fair Value Balance as of January 1, 2012
  $ 4,651,937     $ 963,533     $     $ 5,615,470  
Purchases
    14,185,435       7,090,290       448,908       21,724,633  
Sales
                       
Net realized gain
    967       11,960             12,927  
Net change in unrealized appreciation (1)
    144,031       (6,328 )     31,423       169,126  
Principal reduction
    (2,292,619 )     (998,479 )           (3,291,098 )
Net discount accretion
    9,969       (691 )           9,278  
Transfers into Level 3
    201,067                   201,067  
Fair Value Balance as of June 30, 2012
  $ 16,900,787     $ 7,060,285     $ 480,331     $ 24,441,403  
Change in net unrealized appreciation (depreciation) in investments still held as of June 30, 2012 (1)
  $ 171,616     $ (28,919 )   $ 31,423     $ 142,697  
 
(1)
Amount is included in the related amount on investments in the condensed consolidated statement of operations.

There were no investments held for the six month period ended June 30, 2011. One senior debt security was transferred into the Level 3 hierarchy during the six months ended June 30, 2012 and this investment was transferred at fair value as of the beginning of the period. This transfer from Level 2 to Level 3 was based on the observed lack of liquidity (i.e. insufficient number of broker quotes) based on information supplied by a third party pricing source, whereby such liquidity information is routinely reviewed no less frequently than monthly. All realized and unrealized gains and losses are included in earnings (changes in net assets) and are reported as separate line items within the Company’s condensed consolidated statements of operations.

The carrying values of receivables, other assets, accounts payable and accrued expenses approximate fair value due to their short maturities. The carrying value of cash and foreign currency is classified as Level 1 with respect to the fair value hierarchy. The carrying value of the revolving credit facility approximates its fair value and it would be classified as Level 2 with respect to the fair value hierarchy.

6.
Agreements and Related Party Transactions

The Company entered into a managing dealer agreement with CNL Securities Corp., an affiliate of CNL. CNL Securities Corp. serves as the managing dealer of the Offering and in connection therewith receives selling commissions of up to 7% of gross offering proceeds, a marketing support fee of up to 3% of gross offering proceeds, and reimbursement of due diligence and certain other expenses incurred in connection with the Offering. All or any portion of these fees and expense reimbursements may be reallowed to participating brokers. The Company will pay a maximum sales load of 10% of gross offering proceeds for all combined selling commissions, marketing support fees and expense reimbursements.

The Company entered into an investment advisory agreement with CNL (together with one amendment, the “Investment Advisory Agreement”) for the overall management of the Company’s investment activities. The Company and CNL have entered into a sub-advisory agreement with KKR (the “Sub-Advisory Agreement”), under which KKR is responsible for the day-to-day management of the Company’s investment portfolio. CNL earns a base management fee equal to an annual rate of 2% of the Company’s average gross assets and it is computed and paid monthly. CNL also earns a performance-based incentive fee that is comprised of the following two parts: (i) a subordinated incentive fee on pre-incentive fee net investment income, and (ii) an incentive fee on capital gains. The subordinated incentive fee, paid quarterly if earned, is computed as the sum of (A) 100% of quarterly pre-incentive fee net investment income in excess of 1.75% of average adjusted capital up to a limit of 0.4375% of average adjusted capital, and (B) 20% of pre-incentive net investment income in excess of 2.1875% of average adjusted capital. The incentive fee on capital gains, paid annually if earned, is equal to 20% of realized capital gains on a cumulative basis from inception, net of (A) all realized capital losses and unrealized depreciation on a cumulative basis and (B) net of the aggregate amount of any previously paid incentive fee on capital gains. CNL compensates KKR for advisory services that it provides to the Company with 50% of the base management fees and performance-based incentive fees that CNL receives under the Investment Advisory Agreement.

The terms of the Investment Advisory Agreement entitle CNL (and indirectly KKR) to receive up to 5% of gross proceeds in connection with the Offering as reimbursement for organization and offering expenses incurred by the Advisors on behalf of the Company. The Advisors waived the requirement for the Company to reimburse them for organization and offering expenses for the period from June 17, 2011 through January 31, 2012. The waiver of the organization and offering expense reimbursement requirements did not reduce the overall amount of organization and offering expenses incurred by the Advisors that is eligible for reimbursement by the Company in future periods. Beginning February 1, 2012, the Company implemented an expense accrual rate of 0.75% of gross offering proceeds to initiate the reimbursement of organization and offering expenses incurred by the Advisors.

 
27

 
 
The Company entered into an administrative services agreement with CNL (the “Administrative Services Agreement”) whereby CNL performs, and oversees the performance of, various administrative services on behalf of the Company. Administrative services may include transfer agency oversight and supervisory services, shareholder communication services, general ledger accounting, maintaining required financial records, financial reporting, internal audit, preparations of report to the Company's board of directors and lenders, calculating the Company’s net asset value, filing tax returns, preparing and filing SEC reports, preparing, printing and disseminating shareholder reports, overseeing the payment of the Company’s expenses, oversight of services providers and the performance of administrative and professional services rendered to the Company by others. CNL may also enter into agreements with its affiliates for the performance of select administrative services or the retention of personnel.  The Company reimburses CNL and its affiliates for the professional services and expenses it incurs in performing its administrative obligations on behalf of the Company.  

CNL, certain CNL affiliates, and KKR receive compensation and reimbursement of expenses in connection with (i) the performance and supervision of administrative services and (ii) the Offering. Related party fees, expenses and reimbursement of expenses incurred in the three and six month period ended June 30, 2012 and three and six month period ended June 30, 2011 are summarized below:
 
 
 
Related Party
 
 
 
Source Agreement
 
 
 
Description
 
Three Months Ended
June 30, 2012
   
Three Months Ended
June 30, 2011
   
Six Months
 Ended
June 30, 2012
   
Six Months
 Ended
June 30, 2011
 
CNL Securities Corp.
 
Managing Dealer Agreement
 
Selling commissions and marketing support fees
  $ 13,767,017     $ 199,750     $ 22,636,040     $ 199,750  
CNL and KKR
 
Investment Advisory Agreement
 
Base management fees
(investment advisory fees)
    1,621,659       973       2,515,819       973  
CNL and KKR
 
Investment Advisory Agreement
 
Performance-based
incentive fees (1)
    (342,279 )           532,967        
CNL and KKR
 
Investment Advisory Agreement
 
Organization and offering expenses reimbursement (2)
    1,087,899             1,615,640        
CNL
 
Administrative Services Agreement
 
Administrative and
compliance services
    199,597       12,639       318,415       12,639  
(1)
During the six months ended June 30, 2012, the Company recorded performance-based incentive fee expense of $532,967, comprised of (i) $532,967 expense provision for incentive fee on capital gains and (ii) no expense provision for subordinated incentive fee on income. The incentive fee on capital gains was not earned by the Advisors nor payable to the Advisors as of June 30, 2012.
(2)
The Advisors received reimbursement payments for organization and offering expenses in the amount of $1,184,860 in the six months ended June 30, 2012, including $896,218 for organization expenses and $288,642 for offering expenses. The Company recorded a reimbursement payable to the Advisors in the amount of $430,780 for offering expenses as of June 30, 2012 which is included in other accrued expenses and liabilities on the condensed consolidated statements of assets and liabilities. During the six months ended June 30, 2012, the Advisors incurred $1,418,725 in additional offering costs. As of June 30, 2012, approximately $5.0 million was the net amount of offering expenses incurred by the Advisors, net of additional offering costs, reimbursement payments and amounts payable to the Advisors in the six months ended June 30, 2012.
 
On June 7, 2011, the Company entered into an Expense Support and Conditional Reimbursement Agreement (the “Expense Support Agreement”) with CNL and KKR pursuant to which CNL and KKR jointly and severally agreed to pay to the Company all operating expenses (an “Expense Support Payment”) during the Expense Support Payment Period between June 17, 2011 to December 31, 2011. On December 16, 2011, the Company and the Advisors entered into an amendment to the Expense Support Agreement, effective January 1, 2012, that extended the terminal date of the Expense Support Payment Period to March 31, 2012 and reduced the Reimbursement Ratio from 100% to 65% of the Company’s Operating Expenses. The Amendment also redefined Operating Expenses as all operating costs and expenses paid or incurred by the Company, as determined under GAAP, including base advisory fees payable pursuant to the Investment Advisory Agreement, and excluding (i) performance-based incentive fees payable pursuant to the Investment Advisory Agreement, (ii) organization and offering expenses, and (iii) all interest costs related to borrowings for such period. On March 16, 2012, the Company and the Advisors entered into an amendment and restatement of the Expense Support Agreement, effective April 1, 2012, that extended the terminal date of the Expense Support Payment Period to June 30, 2012 and reduced the Reimbursement Ratio from 65% to 25% of the Company’s Operating Expenses.

 
28

 
 
Presented below is a summary of Expense Support Payments and the associated terminal eligibility dates for Reimbursement Payments for the year ending December 31, 2011 and the six months ended June 30, 2012.

Period
 
Expense Support
Payments
 
Eligible for Reimbursement
Payments through
Period ended December 31, 2011
  $ 1,375,592  
December 31, 2014
Six months ended June 30, 2012
    1,590,221  
December 31, 2015
Total
  $ 2,965,813    
 
During the term of the Expense Support Agreement, the Advisors are entitled to an annual year-end reimbursement payment by the Company for unreimbursed Expense Support Payments made under the Expense Support Agreement (a “Reimbursement Payment”), but such Reimbursement Payments may only be paid (i) within three years after the year in which such Expense Support Payments are attributable, (ii) to the extent that it would not cause the Company’s Other Operating Expenses (Operating Expenses excluding base advisory fees) to exceed 1.91% of average net assets attributable to common shares as of the end of any such calendar year and (iii) after January 1, 2013.  As of June 30, 2012 the Company has accrued $30,093 for Reimbursement Payment obligations and such amount has been recorded as (i) reimbursement of expense support on the condensed consolidated statement of operations and (ii) accrued reimbursement of expense support on the condensed consolidated statements of assets and liabilities.  As a result, the Other Operating Expense-to-average net asset ratio is equal to 1.91%, annualized.  The Company records the liability for the Reimbursement Payments based on a hypothetical liquidation of its investment portfolio at the end of each reporting period.  Management believes that additional liabilities for Reimbursement Payments are not probable as of June 30, 2012. 
 
Indemnification - The Investment Advisory Agreement and the Sub-Advisory Agreement provide certain indemnification to the Advisors, their directors, officers, persons associated with the Advisors, and their affiliates. As of June 30, 2012, management believes that the risk of incurring any losses for such indemnification is remote. The managing dealer agreement provides certain indemnification to the managing dealer and each participating broker and their respective officers, directors, partners, employees, associated persons, agents and control persons. As of June 30, 2012, management believes that the risk of incurring any losses for such indemnification is remote.
 
7.
Earnings Per Share

The following information sets forth the computation of basic and diluted net increase in net assets from operations per share (earnings per share).
 
Basic and Diluted Net Increase in Net Assets Per Share
   
Three Months Ended June 30, 2012
    Three Months Ended June 30, 2011    
Six Months Ended June 30, 2012
   
Six Months Ended June 30, 2011
 
Numerator - net increase in net assets resulting from operations
  $ 2,075,699     $     $ 7,551,627     $  
Denominator - Weighted average shares outstanding
    22,102,008       60,465       16,525,646       41,449  
Basic/diluted net increase in net assets from operations per share (1)
  $ 0.09     $     $ 0.46     $  
 
(1)
Diluted and basic net increase in net assets from operations per share were equivalent in each period because there were no common stock equivalents outstanding in each period.

8.
Distributions

The Company's board of directors declared distributions for 26 record dates in the six months ended June 30, 2012. Declared distributions are paid monthly. The total of declared distributions and the sources of distribution payments for the six months ended June 30, 2012 are presented in the table below. There were no distributions for the six months ended June 30, 2011.
 
Distributions
 
Per Share
   
Amount
   
Allocation
 
For three months ended March 31, 2012 (13 record dates)
  $ 0.19     $ 1,987,103        
For three months ended June 30, 2012 (13 record dates)
    0.19       4,107,381        
Total Distributions for the six months ended June 30, 2012
  $ 0.38     $ 6,094,484       100.0 %
From Net Investment Income
  $ 0.29     $ 4,854,946       79.7  
From Realized Gains
    0.09       1,239,538       20.3  
 
For federal income tax purposes, the distributions paid to shareholders for the six months ended June 30, 2012 are expected to be fully taxable as ordinary income and management does not expect to classify any portion of the distributions as return of capital. The tax classification of the calendar year 2012 distributions will be finalized after the end of the calendar year and then reported to shareholders.

On June 29, 2012, the Company’s board of directors declared a distribution of $0.014606 per share for 13 record dates beginning July 3, 2012 and ending on September 25, 2012.
 
 
29

 
 

9.
Share Transactions

On January 4, 2012, January 23, 2012 and February 28, 2012, the Company’s board of directors increased the public offering price per share of common stock under the Offering to $10.40, $10.65 and $10.85, respectively, to ensure that the associated net offering price per share, exclusive of sales load ($9.360, $9.585 and $9.765, respectively) equaled or exceeded the net asset value per share on each subsequent subscription closing date and distribution reinvestment date.
 
Transactions in shares of common stock were as follows for the six months ended June 30, 2012 and June 30, 2011:
 
   
Six Months Ended
June 30, 2012
   
Six Months Ended
June 30, 2011
 
   
Shares
   
Amount
   
Shares
   
Amount
 
Gross Proceeds from Offering
    22,043,951     $ 236,694,465       266,750     $ 2,600,500  
Commissions and Marketing Support Fees
          (22,636,040 )           (199,750 )
Reinvestment of Distributions
    344,681       3,348,013              
Net Proceeds from Offering
    22,388,632     $ 217,406,438       266,750     $ 2,400,750  
Average Net Proceeds Per Share
      $  9.71             $ 9.00      
 
10.           Financial Highlights

The following per share data and financial ratios have been derived from information provided in the consolidated condensed financial statements.
 
OPERATING PERFORMANCE PER SHARE
 
June 30, 2012
   
June 30, 2011
 
Net Asset Value, Beginning of Period - January 1
  $ 9.21     $ 9.00  
Net Investment Income (Loss), Before Expense Reimbursement (1)
    0.20       (0.97 )
Expense Reimbursement (1)
    0.09       0.97  
Net Investment Income (1)
    0.29       0.00  
Net Realized and Unrealized Gain (1)(2)
    0.42        
Net Increase Resulting from Investment Operations
    0.71        
Distributions from Net Investment Income (3)
    (0.29 )      
Distributions from Realized Gains (3)
    (0.09 )      
Net Decrease Resulting from Distributions to Common Shareholders
    (0.38 )      
Capital share transactions -Issuance of common stock above net asset value (4)
    0.10        
Net Increase Resulting from Capital Share Transactions
    0.10        
Net Asset Value, End of Period - June 30
  $ 9.64     $ 9.00  
                 
INVESTMENT RETURNS (for the six months ended June 30, 2012)
               
Total Investment Return-Net Price (5)
    8.60 %     0.00 %
Total Investment Return-Net Asset Value (6)
    8.77 %     0.00 %
RATIOS/SUPPLEMENTAL DATA (all amounts in thousands)
               
Net Assets, End of Period
  $ 284,026     $ 2,601  
Average Net Assets (7)
  $ 158,526     $ 373  
Average Credit Facility Borrowings
  $ 62,108     $  
Shares Outstanding, End of Period
    29,462       289  
Weighted Average Shares Outstanding
    16,526       41  
                 
Ratios to Average Net Assets: (7)
               
Total Expenses Before Operating Expense Reimbursement
    4.00 %     10.80 %
Total Expenses After Operating Expense Reimbursement
    3.01 %     0.00 %
Net Investment Income
    3.06 %     0.00 %
Portfolio Turnover Rate
    16 %     0 %
Asset Coverage Ratio (8)
    4.64        
 
(1)
The per share data was derived by using the weighted average shares outstanding during the period.
(2)
The amount shown at this caption is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the entire period may not agree with the change in the aggregate net realized and unrealized gains and losses in portfolio securities for the period because of the timing of sales of the Company’s shares in relation to fluctuating market values for the portfolio securities.
(3)
The per share data for distributions is the actual amount of distributions paid or payable per share of common stock outstanding during the entire period; distributions per share are rounded to the nearest $0.01.
(4)
The continuous issuance of shares of common stock may cause an incremental increase in net asset value per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date. The per share data was derived by computing (i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date times (B) the differences between the net proceeds per share and the net asset value per share on each share transaction date, divided by (ii) the total shares outstanding at the end of the period.
 
 
30

 
 
(5)
Total investment return-net price is a measure of total return for shareholders who purchased the Company's common stock at the beginning of the period, including dividends paid or payable during the period.  Total investment return-net price is based on (i) the purchase of one share at the public offering price, net of sales load, on the first day of the period, (ii) the sale at the net asset value per share on the last day of the period, of (A) one share plus (B) any fractional shares issued in connection with the reinvestment of monthly distributions, and (iii) the cash payment for distributions payable, if any, on the last day of the period. The total investment return-net price calculation assumes that (i) monthly cash distributions are reinvested in accordance with the Company’s distribution reinvestment plan and (ii) the fractional shares issued pursuant to the distribution reinvestment plan are issued at the then public offering price, net of sales load, on each monthly distribution payment date. Since there is no public market for the Company’s shares, then current market value is assumed to be equal to net asset value per share on the last day of the period. Total investment return is not annualized. The Company's performance changes over tie and currently be different than that shown above.  Past performance is no guarantee of future results.
(6)
Total investment return-net asset value is a measure of the change in total value for shareholders who held the Company's common stock at the beginning and end of the period, including dividends paid or payable during the period. Total investment return-net asset value is based on (i) the beginning period net asset value per share on the first day of the period, (ii) the net asset value per share on the last day of the period, of (A) one share plus (B) any fractional shares issued in connection with the reinvestment of monthly distributions, and (iii) the value of distributions payable, if any, on the last day of the period. The total investment return-net asset value calculation assumes that (i) monthly cash distributions are reinvested in accordance with the Company’s distribution reinvestment plan and (ii) the fractional shares issued pursuant to the distribution reinvestment plan are issued at the then public offering price, net of sales load, on each monthly distribution payment date. Since there is no public market for the Company’s shares, then current market value is assumed to be equal to net asset value per share on the last day of the period. Total investment return-net asset value is not annualized. The Company's performance changes over tie and currently be different than that shown above.  Past performance is no guarantee of future results.
(7)
The computation of average net assets during the period is based on the daily value of net assets. Ratios are not annualized.
(8)
Asset coverage ratio is equal to (i) the sum of (A) net assets at the end of the period and (B) total debt outstanding at the end of the period, divided by (ii) total debt outstanding at the end of the period.
 
 11.
Revolving Credit Facility and Borrowings

On August 22, 2011, CCT Funding entered into a revolving credit facility agreement (including an amendment, the “Credit Agreement”) with Deutsche Bank AG, New York Branch (“Deutsche Bank”). Deutsche Bank is the sole initial lender and serves as administrative agent under the Credit Agreement. The Credit Agreement currently provides for borrowings in an aggregate amount up to $175 million on a committed basis, consisting of an initial borrowing commitment of $75 million (the "Tranche A Loans") and a second borrowing commitment of $100 million (the “Tranche B Loans"). The Credit Agreement contains an accordion feature that can increase the aggregate maximum credit commitment up to $250 million, if exercised and under certain circumstances. Under the Credit Agreement, CCT Funding has made certain representations and warranties and it is required to comply with various covenants, reporting requirements and other customary requirements for credit agreements of this nature. As of June 30, 2012 management believes that the Company was in compliance with the covenants of the revolving credit facility. The Company has incurred deferred financing costs of $278,920 in connection with obtaining and amending the revolving credit facility.

Revolving Credit Facility Summary
 
             
   
Loan Tranche
       
      A       B    
Total
 
Borrowing Commitment Amount
  $ 75,000,000     $ 100,000,000     $ 175,000,000  
Amount Borrowed as of January 1, 2012
    25,340,000             25,340,000  
Net Amount Borrowed-six months ended June 30, 2012
    49,660,000       2,940,000       52,600,000  
Amount Borrowed as of June 30, 2012
    75,000,000       2,940,000       77,940,000  
Unused Borrowing Commitment Balance as of June 30, 2012
  $     $ 97,060,000     $ 97,060,000  
Unused Commitment Fee
    0.75 %     0.75 %        
Base Interest Rate (reset monthly)
 
30-day LIBOR
   
90-day LIBOR
         
Spread
    1.70 %     2.35 %        
Interest Rate/Annualized Interest Rate as of June 30, 2012
    1.94%/1.97 %     2.82%/2.86 %        
For the three months ended June 30, 2012:
                       
   Weighted Average Interest Rate
    1.94 %     2.82 %     1.95 %
   Average Borrowings
  $ 66,143,077     $ 473,846     $ 66,616,923  
   Direct Interest Expense
    324,431       3,375       327,806  
   Unused Commitment Fees
                    149,226  
   Amortization of Deferred Financing Costs
                    36,548  
   Total Interest Expense
                  $ 513,580  
For the six months ended June 30, 2012:
                       
   Weighted Average Interest Rate
    1.95 %     2.82 %     1.96 %
   Average Borrowings
  $ 61,871,209     $ 236,923     $ 62,108,132  
   Direct Interest Expense
    610,602       3,375       613,976  
   Unused Commitment Fees
                    150,399  
   Amortization of Deferred Financing Costs
                    69,389  
   Total Interest Expense
                  $ 833,764  
 
31
 

 
12.
Guarantees and Commitments
 
In the normal course of business, the Company may enter into guarantees on behalf of portfolio companies. Under these arrangements, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. The Company has no such guarantees outstanding at June 30, 2012 and 2011.
 
13.
Subsequent Events
 
On July 9, 2012, the Company commenced its quarterly share repurchase program and filed its tender offer statement with the SEC on Form TO. The Company is offering to repurchase up to 236,604 shares of common stock at a cash price of $9.64 per share and its offer is made upon the terms and subject to the conditions set forth in the Offer to Purchase. The Company’s offer to repurchase shares will expire on August 15, 2012.
 
As of August 10, 2012, the total amount borrowed under the revolving credit facility was $133,040,000.
 
 
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
STATEMENT REGARDING FORWARD LOOKING INFORMATION
 
The following information contains statements that constitute forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements generally are characterized by the use of terms such as “may,” “should,” “plan,” “anticipate,” “estimate,” “intend,” “predict,” “believe” and “expect” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the current global economic downturn, increased direct competition, changes in government regulations or accounting rules, changes in local, national and global capital market conditions, our ability to obtain or access credit lines or credit facilities on satisfactory terms, changes in interest rates, availability of proceeds from our offering of shares, our ability to identify suitable investments, our ability to close on identified investments, inaccuracies of our accounting estimates, our ability to locate suitable borrowers to borrow from us on favorable terms to us, and the ability of such borrowers to make payments to us under their respective loans terms and conditions with us. Given these uncertainties, we caution you not to place undue reliance on such statements, which apply only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. The forward-looking statements should be read in light of the risk factors identified in the “Risk Factors” section of our annual report on Form 10-K filing for the year ended December 31, 2011.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ.
 
Our critical accounting policies are described in the notes to the condensed consolidated financial statements. Accordingly see Note 2 to the condensed consolidated financial statements for a description of critical accounting policies. We consider these accounting policies critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
See Note 2 to the condensed consolidated financial statements for a description of recently issued accounting pronouncements. We do not believe that any recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on our condensed consolidated financial statements.
 
EXECUTIVE OVERVIEW
 
We are a non-diversified closed-end management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). Formed as a Maryland corporation on June 9, 2010, our investment portfolio is externally managed by CNL Fund Advisors Company (“CNL”) and KKR Asset Management LLC (“KKR”), collectively, the “Advisors”, which are responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing investment opportunities, structuring investments and monitoring our portfolio on an ongoing basis, and determining the amount of leverage employed in our investment portfolio. Both Advisors are registered as investment advisers with the SEC. CNL also provides the administrative services necessary for us to operate.
 
Investment Objective and Investments
 
Our investment objective is to provide our shareholders with current income and, to a lesser extent, long-term capital appreciation. We intend to meet our investment objective by investing primarily in the debt of privately owned U.S. companies (also referred to as “portfolio companies”) with a focus on originated transactions sourced through the networks of our Advisors. We anticipate that a substantial portion of our portfolio will consist of senior and subordinated debt, which we believe offer opportunities for superior risk-adjusted returns and income generation. Our debt investments may take the form of corporate loans or bonds, may be secured or unsecured and may, in some cases, be accompanied by warrants, options or other forms of equity participation. We may also potentially purchase common or preferred equity interests in portfolio companies.
 
 
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The level of our investment activity can and does vary substantially from period to period depending on many factors, including: the amount of equity capital we raise from offering common stock in our company, the amount of capital we may borrow under our revolving credit facility, the amount of debt and equity capital available at large from various potential capital providers to finance the business activities of portfolio companies, the demand for debt from creditworthy privately owned U.S. companies, the level of merger, acquisition and refinancing activity involving private companies, the availability of credit to finance transactions the general economic environment, and competitive environment for the types of investments we currently seek and intend to seek in the future.
 
As a BDC, we are required to comply with certain regulatory requirements. For instance, we may not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million. These rules also permit us to include as qualifying assets certain follow-on investments in companies that were eligible portfolio companies at the time of initial investment but that no longer meet the definition.
 
Revenues
 
We generate revenue primarily in the form of interest on the debt securities of portfolio companies that we acquire and hold for investment purposes. Our investments in debt securities generally have an expected maturity of three to ten years, although we have no lower or upper constraint on maturity, and typically bear interest at a fixed or floating rates. Interest on our debt securities is generally payable quarterly or semi-annually. In some cases, our debt investments may partially defer cash interest payments with payment-in-kind provisions. Any outstanding principal amount of our debt securities and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment fees, origination fees, and fees for providing significant managerial assistance.
 
Operating Expenses
 
Our primary operating expenses include the payment of a base management fee and, depending on our operating results, performance-based incentive fees, reimbursable expenses under the investment advisory agreement, interest expense and financing fees, and fund administrative expenses and third-party expenses incurred under the administrative services agreement. The base management fee and performance-based incentive fees compensate the Advisors for their efforts and resources in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions.
 
FINANCIAL AND OPERATING HIGHLIGHTS
 
At June 30, 2012 ($ in millions except per share data)
       
Total Assets
  $ 426.67  
Adjusted Total Assets (Total Assets net of payable for investments purchased)
  $ 364.19  
Investment in Portfolio Companies
  $ 405.80  
Borrowings (under credit facility)
  $ 77.94  
Net Assets
  $ 284.03  
Average Net Assets
  $ 158,52  
Average Credit Facility Borrowings
  $ 62,11  
Increase in Total Assets since December 31, 2011 (not annualized)
    +267 %
Increase in Net Assets since December 31, 2011 (not annualized)
    +336 %
Net Asset Value Per Share
  $ 9.64  
Asset Coverage Ratio ((Borrowings + Net Assets)/Borrowings)
    4.64  
Leverage Ratio (Borrowings/Adjusted Total Assets)
    21 %
 
Portfolio Activity for the Six Months Ended June 30, 2012 ($ in millions except per share data)
       
Cost of Investments purchased
  $ 344.50  
Sales, principal payments and other exits
  $ 48.21  
Net change in portfolio companies
    +31  
Number of portfolio companies at end of period
    141  
Net investment income before incentive fees
  $ 5.31  
Net investment income
  $ 4.85  
Net realized gains on investments and foreign currency transactions
  $ 1.31  
Net change in unrealized appreciation (depreciation) on investments and foreign currency translation:
  $ 1.39  
Net increase in net assets from operations
  $ 7.55  
Total distributions declared
  $ 6.09  
Distributions covered by accumulated taxable ordinary income (tax basis)
  $ 6.09  
Net investment income before incentive fees per share
  $ 0.33  
Net investment income per share
  $ 0.29  
Earnings per share
  $ 0.46  
Distributions declared per share outstanding for the entire period
  $ 0.38  

 
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Common Stock Offering Summary for the Six Months Ended June 30, 2012
($ in millions except per share data)
     
Gross Proceeds
  $ 236.69  
Net Proceeds to Company
  $ 214.06  
Average net proceeds per share
  $ 9.71  
Shares issued in connection with Offering
    22.04  
Increase in number of shares outstanding (not annualized)
    317 %
 
BUSINESS ENVIRONMENT

 
During the first six months of 2012, we continued to see widespread macroeconomic concerns arising from fiscal issues in the United States and Europe and persistent signs of weakness in global economic growth. The global economic situation created volatility in the capital markets, especially during the second quarter of 2012 as the S&P 500 decreased 2.75%. As it relates to the credit markets, this situation contributed to an impactful decline in the beginning of the second quarter of 2012 for the Merrill Lynch High Yield Master II Index, a primary measure of subordinated debt, and the S&P/LSTA Leveraged Loan Index. However, both indices showed great resilience on a total return basis by ending the second quarter with positive total returns of 1.81% and 0.75%, respectively. Additionally for the first the first six months of 2012, the Merrill Lynch High Yield Master II Index registered a total return of 7.05% and the S&P/LSTA Index also performed well by increasing 4.54%.
 
PORTFOLIO AND INVESTMENT ACTIVITY
 
Portfolio Investment Activity for the Three Months Ended June 30, 2012
 
On July 1, 2011, we commenced investment operations and began executing on our strategy of investing primarily in the debt securities of privately-owned U.S. companies. During the three months ended June 30, 2012, we acquired investment positions in portfolio companies totaling $208.49 million, we sold investment positions totaling $17.27 million and we collected principal payments of $7.03 million. As of June 30, 2012, our investment portfolio consisted of investment interests in 141 portfolio companies, for a total fair value of $405.80 million and an associated cost basis of $403.80 million. During the three months ended June 30, 2012, we added 34 new portfolio companies with an aggregate investment of approximately $100.3 million, we completely exited from our investment positions in seven portfolio companies that had been held in the investment portfolio at March 31, 2012 and one portfolio company was consolidated into another.
 
None of our portfolio investments was non-accrual or in default as of June 30, 2012.
 
The following table summarizes the composition of our investment portfolio at cost and fair value as of June 30, 2012.
 
Asset Category
 
Cost
   
Fair Value
   
Percentage of
Portfolio
   
Percentage of
Net Assets
 
Senior debt securities
  $ 277,527,322     $ 278,812,226       68.7 %     98.2 %
Subordinated debt securities
    125,819,845       126,505,550       31.2       44.5  
Total debt securities
    403,347,167       405,317,776       99.9       142.7  
Common stock
    448,908       480,331       0.1       0.2  
Subtotal
    403,796,075       405,798,107       100.0 %     142.9  
Short term investments
    10,712,703       10,712,703               3.7  
Total investments
  $ 414,508,778     $ 416,510,810               146.6 %
 
The primary investment concentrations include (i) senior debt and (ii) subordinated debt securities. The debt investments in our portfolio were purchased at an average price of 99.6% of par value. At June 30, 2012, 49.0% of our debt investments featured floating interest rates, generally index based on London Interbank Offered Rate (“LIBOR”), and 51.0% of our debt investments featured fixed interest rates. Approximately 82% of our floating rate debt investments featured interest rate floors with an average interest rate floor of 1.53%.
 
All of our floating rate debt investments have index reset frequencies of less than twelve months with the majority resetting at least quarterly. The weighted average coupon spread to LIBOR of our floating rate debt investment sub-portfolio was 579 basis points as of June 30, 2012 and 468 basis points as of December 31, 2011; the weighted average years to maturity was 5.2 years as of June 30, 2012, as compared to 4.9 years as of December 31, 2011. As of June 30, 2012, our fixed rate debt investment sub-portfolio had a weighted average coupon of 9.6% as compared to 9.3% as of December 31, 2011; the average years to maturity was 5.3 years as of June 30, 2012 and December 31, 2011. Weighted average coupon, coupon spreads and weighted average years to maturity are calculated based on par values.
 
 
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The following table summarizes our top ten portfolio companies as measured by fair value as of June 30, 2012:
 
       
Fair Value
   
% of Inv.
       
Interest
   
Base Rate
 
Maturity
Portfolio Company
 
Industry
 
($ millions)
   
Portfolio
   
Investments
 
Rate (1)
   
Floor
 
Date
Catalina Marketing Corp.
 
Media
  $ 18.75       4.6 %  
Senior Debt
    L+550        
9/29/2017
                       
Subordinated Debt
    10.50%        
10/1/2015
   
 
                 
Senior Debt
    L+450        
6/13/2017
HUB International, Ltd.   Insurance     17.89       4.4    
Senior Debt
    L+475       2.00%  
12/13/2017
                       
Subordinated Debt
    9.00%          
12/15/2014
                       
Subordinated Debt
    10.25%          
6/15/2015
Data Device Corp.
 
Capital Goods
    15.78       3.9    
Senior Debt
    L+950       1.25%  
7/11/2019
                       
Senior Debt
    L+600       1.50%  
7/11/2018
Newport Television, LLC
 
Media
    12.74       3.1    
Senior Debt
    L+675       3.00%  
9/14/2016
Guitar Center, Inc.
 
Retailing
    11.49       2.8    
Senior Debt
    L+525          
4/9/2017
Wastequip, LLC
 
Materials
    11.23       2.8    
Senior Debt
    L+675       1.50%  
12/15/2017
Good Sam Enterprises, LLC
 
Media
    10.52       2.6    
Senior Debt
    11.50%          
12/1/2016
   
 
                 
Senior Debt
    10.50%          
11/1/2018
Kinetic Concepts, Inc.  
Health Care Equipment & Services
    10.46       2.6    
Senior Debt
    L+525       1.25%  
5/4/2018
                       
Senior Debt
    L+525       1.25%  
11/4/2016
Education Management, LLC
 
Consumer Services
    10.43       2.6    
Senior Debt
    L+700       1.25%  
3/30/2018
                       
Subordinated Debt
    8.75%          
6/1/2014
TL Acquisitions, Inc.
 
Media
    9.89       2.4    
Senior Debt
    11.50%          
4/15/2020
                       
Subordinated Debt
    10.50%          
1/15/2015
Total
 
 
  $ 129.17       31.8 %                      
(1) “L” is the three month LIBOR. For example, the interest rate of L+550 is equal to the sum of (i) LIBOR on the interest reset date and (ii) 5.5%.
 
We have implemented a modest currency hedging strategy to compensate us for declines in the value of the Euro relative to the US dollar. At June 30, 2012, we held four investment positions in debt securities denominated in Euro totaling €8,813,000 in principal amount. Concurrently we held two foreign exchange forward contracts for the sale of €7,600,000 in approximately five and six months from June 30, 2012 at settlement date currency exchange rates that range between €1.0/US$ 1.2536 and €1.0/US$ 1.26868.
 
The table below presents a diversification summary of our portfolio company investments arranged by industry classifications at June 30, 2012 and December 31, 2011. As of June 30, 2012, our investment portfolio of 141 portfolio companies was diversified across 23 industry classifications, as compared to our investment portfolio as of December 31, 2012 that consisted of 110 portfolio companies diversified across 24 distinct industry classifications.
 
Industry Classification
 
June 30, 2012
   
December 31, 2011
 
Media
    17.5 %     8.1 %
Software & Services
    12.4       14.6  
Capital Goods
    10.4       3.4  
Materials
    7.9       3.4  
Health Care Equipment & Services
    7.1       6.9  
Retailing
    7.0       12.6  
Insurance
    6.8       2.4  
Technology Hardware & Equipment
    5.7       4.6  
Diversified Financials
    4.7       7.8  
Telecommunication Services
    3.8       9.0  
Consumer Services
    3.7       4.9  
Pharmaceuticals, Biotechnology & Life Sciences
    2.5       5.0  
Commercial & Professional Services
    2.2       3.2  
Energy
    2.1       3.3  
Food & Staples Retailing
    1.8       2.5  
Transportation
    1.6       3.4  
Remaining Industries (7/8)
    2.8       4.9  
                 
Total
    100.0 %     100.0 %
 
    We neither “control” nor are we an “affiliated person” (each as defined in the 1940 Act) of any of our portfolio companies. Under the 1940 Act, we generally would be presumed to “control” a portfolio company if we own beneficially, either directly or through one or more controlled companies, 25% or more of its voting securities; and generally would be an “affiliated person” of a portfolio company if we directly or indirectly own or otherwise control 5% or more of its voting securities.
 
 
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LIQUIDITY AND CAPITAL RESOURCES
 
We generate cash primarily from (i) the net proceeds from our continuous public offering of common stock (the “Offering”) (ii) borrowing funds under a revolving credit facility, (iii) interest income, dividends, fees earned from our portfolio investments, and principal payments, and (iv) proceeds from sales of our portfolio investments. Net proceeds from our Offering are our primary source of capital to expand our investment portfolio of portfolio companies; interest income, net of expenses, is our primary source of cash to pay distributions to our shareholders.
 
Offering of Common Stock
 
On June 23, 2010, we filed a registration statement with the SEC on Form N-2 (as amended and supplemented, the “Registration Statement”) to register the Offering. The Offering, which relates to the sale of up to $1.6 billion of shares of common stock (150 million shares at an offering price of $10.85 per share, as amended), commenced on April 4, 2011 when the Registration Statement was declared effective. We raised net proceeds of $132.3 million in the three months ended June 30, 2012 and $281.8 million since the start of our Offering, including the reinvestment of distributions into shares of our common stock. Nearly all of this equity capital has been employed to acquire investment positions in portfolio companies.
 
Credit Facility
 
We borrow funds to invest alongside the equity capital proceeds of our Offering to increase our investment positions in portfolio companies and to further diversify the number of portfolio company investment positions.  In 2011, our wholly owned subsidiary CCT Funding LLC (“CCT Funding”) entered into a revolving credit facility agreement (the “Credit Agreement”) with Deutsche Bank AG, New York Branch (“Deutsche Bank”). Deutsche Bank is the sole initial lender and serves as administrative agent under the Credit Agreement. CCT Funding has appointed us to manage its investment portfolio pursuant to the terms of an investment management agreement. CCT Funding’s obligations to Deutsche Bank are secured by a first priority security interest in substantially all of the assets of CCT Funding, including its investment portfolio. The obligations of CCT Funding under the revolving credit facility are non-recourse to us. All amounts borrowed under the revolving credit facility will mature, and all accrued and unpaid interest thereunder, will be due and payable on August 22, 2013.
 
The Credit Agreement currently provides for borrowings in an aggregate amount up to $175 million on a committed basis with an accordion feature that can increase the aggregate maximum credit commitment up to $250 million, if exercised and under certain circumstances. We have incurred costs of $0.28 million in connection with obtaining the credit facility and amending the Credit Agreement, primarily consisting of legal fees.
 
Tranche A Loans ($75 million commitment) generally bear interest based on one-month adjusted LIBOR plus a spread of 1.70% per annum. Tranche B Loans ($100 million commitment) generally bear interest based on a three-month adjusted LIBOR plus a spread of 2.35% per annum. The interest rates are reset monthly and interest is payable monthly in arrears. We incur a continuing unused commitment fee of 0.75% per annum on any unused commitment balances.
 
During the three months ended June 30, 2012, we increased our net borrowing balance by $14.2 million. As of June 30, 2012, $75.0 million was borrowed and outstanding as Tranche A Loans and $2.94 million was borrowed and outstanding as Tranche B Loans. The unused commitment balance was $97.06 million under the Tranche B Loans commitment. As of June 30, 2012, the ratio of credit facility borrowings-to-adjusted total assets was 21%. (Adjusted total assets is equal to total assets excluding payable for investments purchased.)  This represented a material reduction in our portfolio leverage since March 31, 2012, which then recorded a borrowings-to-adjusted total assets ratio of 29%. We will continue to draw on the revolving credit facility and combine borrowed funds with equity capital to increase and expand our investment positions in portfolio companies. Additionally, we may further increase the aggregate maximum credit commitment in the future beyond the current commitment level of $175 million.
 
Distributions Paid and Declared
 
We pay our monthly distributions in the form of cash; shareholders may elect to reinvest their monthly distributions in additional shares of our common stock pursuant to the terms our distribution reinvestment plan. Any distributions reinvested under our distribution reinvestment plan will nevertheless remain taxable for U.S. shareholders.
 
    We anticipate our distributions for the current year, in the aggregate, will be substantially supported by taxable ordinary income and realized gains.  We paid total distributions of $4.11 million and $6.09 million for the three-month and six-month periods ended June 30, 2012 respectively. We also estimate that 100% of the total distributions paid in the six months ended June 30, 2012 were comprised of taxable ordinary income. We did not use equity capital or borrowed funds to pay distributions and our shareholders did not incur a return of capital in connection with paid distributions.
 
 
37

 

Distributions
 
Per Share
   
Amount
   
Allocation
 
For three months ended March 31, 2012 (13 record dates)
  $ 0.19     $ 1,987,103        
For three months ended June 30, 2012 (13 record dates)
    0.19       4,107,381        
Total Distributions for the six months ended June 30, 2012
  $ 0.38     $ 6,094,484       100.0 %
From Net Investment Income (GAAP basis)
  $ 0.29     $ 4,854,946       79.7  
From Realized Gains (GAAP basis)
    0.09       1,239,538       20.3  
                         
Tax Allocation as of June 30, 2012 (1)
                       
From Ordinary Income
    0.38       6,094,484       100.0 %
 
(1)
For federal income tax purposes, the distributions paid to shareholders for the six months ended June 30, 2012 are expected to be fully taxable as ordinary income and management does not expect to classify any portion of the distributions as return of capital. The tax classification of the calendar year 2012 distributions will be finalized after the end of the calendar year and then reported to shareholders.
 
Our shareholders who held our common stock during the entire three months and six months ended June 30, 2012 received distributions of $0.189878 per share and $0.375578 per share, respectively.  The annualized distribution rate was consistently 7.0% of our public offering price for shares of common stock. The following table provides the details of cash distributions per share that we have declared and paid on our shares of common stock during the six months ended June 30, 2012.
 
         
Distribution
Record Date
  
Distribution
Payment Date
  
Distribution Amount
Per Share
January 3, 2012
  
February 1, 2012
  
$ 0.013798
January 10, 2012
  
February 1, 2012
  
0.013798
January 17, 2012
  
February 1, 2012
  
0.014000
January 24, 2012
  
February 1, 2012
  
0.014000
January 31, 2012
  
February 1, 2012
  
0.014336
February 7, 2012
  
February 29, 2012
  
0.014336
February 14, 2012
  
February 29, 2012
  
0.014336
February 21, 2012
  
February 29, 2012
  
0.014336
February 28, 2012
  
February 29, 2012
  
0.014336
March 6, 2012
  
March 28, 2012
  
0.014606
March 13, 2012
  
March 28, 2012
  
0.014606
March 20, 2012
  
March 28, 2012
  
0.014606
March 27, 2012
  
March 28, 2012
  
0.014606
April 3, 2012
 
April 25, 2012
 
0.014606
April 10, 2012
 
April 25, 2012
 
0.014606
April 17, 2012
 
April 25, 2012
 
0.014606
April 24, 2012
 
April 25, 2012
 
0.014606
May 1, 2012
 
May 30, 2012
 
0.014606
May 8, 2012
 
May 30, 2012
 
0.014606
May 15, 2012
 
May 30, 2012
 
0.014606
May 22, 2012
 
May 30, 2012
 
0.014606
May 29, 2012
 
May 30, 2012
 
0.014606
June 5, 2012
 
June 27, 2012
 
0.014606
June 12, 2012
 
June 27, 2012
 
0.014606
June 19, 2012
 
June 27, 2012
 
0.014606
June 26, 2012
 
June 27, 2012
 
0.014606
Total
     
$0.375578
 
 
38

 
 
RESULTS OF OPERATIONS
 
RESULTS COMPARISONS FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011
 
 
Set forth below are our results of operations for the three months ended June 30, 2012 and June 30, 2011.  Our business operations started on June 17, 2011 and our portfolio investment activity commenced on July 1, 2011. As a result, the foundation of comparison with the three months ended June 30, 2011 is very limited. Our investment portfolio growth since July 1, 2011 is due the growth in equity capital, and this growth in both capital available for investment and investment activity primarily accounted for the significant increases in investment income, operating expenses, net investment income and net assets between the comparative periods, as discussed below.
 
Investment income

 
Investment income for the three months ended June 30, 2012 was $6.25 million, consisting primarily of interest income. Incremental amounts of equity capital were deployed throughout the three-month period ended June 30, 2012 in the acquisition of portfolio investments as we received net proceeds from our Offering on a weekly basis. Our investment portfolio nearly doubled in size during the three months ended June 30, 2012 and, accordingly, we believe that reported investment income for the three months ended June 30, 2012 is not representative of our stabilized performance or our future performance. We expect further increases in investment income in future periods due to (i) an increasing proportion of investments held for the entire period relative to incremental net investment activity during each quarter, and (ii) a growing base of portfolio company investments that we expect to result from the expected increases in equity capital available to us for investment purposes from our Offering.  We did not generate any investment income in the three months ended June 30, 2011.
 
Operating expenses

 
Operating expenses, before Expense Support Payments and Reimbursement Payments, were $3.13 million for the three months ended June 30, 2012. Investment advisory fees and performance-based incentive fees totaled $1.28 million, or 41% of total operating expenses.  We also recorded a $0.34 million reduction to performance-based incentive fees expenses.  This expense reduction was directly attributable to our net realized and unrealized loss of approximately $1.64 million in the three months ended June 30, 2012, since our accrual for incentive fees on capital gains tracks the overall changes in our realized and unrealized gains (losses). Furthermore, $0.60 million in operating expenses was offset by the netting of (i) Expense Support Payments and (ii) the accrual of probable Reimbursement Payments for prior Expense Support Payments, resulting in net operating expenses of $2.54 million for the three months ended June 30, 2012. During the three months ended June 30, 2012, Expense Support Payments was pegged at 25% of operating expenses excluding (i) performance-based incentive fees, (ii) offering and organization expenses, and (iii) all interest costs related to indebtedness.  We incurred $0.04 million in total operating expenses for the three-month period ended June 30, 2011, of which 100% was then offset by Expense Support Payments.  This operating expense level for the three months ended June 30, 2011 merely represented the initial phase of start-up business operations and before the onset of any portfolio investment activity.
 
    We continued with our expense accrual rate of 0.75% of gross offering proceeds to reimburse for organization and offering expenses incurred by the Advisors. During the three months ended June 30, 2012, we made reimbursement payments to the Advisors in the amount of (i) $0.37 million for organization expenses and (ii) $0.7 million of offering expense reimbursements were capitalized as deferred offering expenses and then reduced by $0.08 million for the amortization of offering expenses on the condensed consolidated statement of operations.
 
    As of June 30, 2012, the interest rate for Tranche A and B Loans was 1.94% and 2.82%, respectively, exclusive of any unused commitment fees and the amortization of deferred financing costs related to establishing the credit facility. The weighted average interest rate for the three months ended June 30, 2012, exclusive of any unused commitment fees and of other deferred financing costs related to establishing the credit facility, was 1.95%. For the three month-month period ended June 30, 2012, we incurred total interest cost, including direct interest expense, unused commitment fees and amortization of deferred financing costs, of $0.51 million in connection with borrowings under the Tranche A and B Loans commitments. We did not have any credit arrangements to borrow capital in the three-month period ended June 30, 2011. (See "Note 11. Revolving Credit Facility and Borrowings" of our condensed consolidated financial statements for additional information regarding the revolving credit facility.)
 
    We consider the following expense categories to be relatively stable in the near term: administrative services, directors’ fees and expenses, insurance policy premiums, and a component of other operating expenses related to compliance services and investor services. Gradual increasing operating expenses include custodian and accounting fees, fund administration costs and revolving credit facility administration costs that are initially tied to minimum base fees coupled with contractual provisions that increase the compensation to third party service providers as the consolidated asset base of our Company increases. Variable operating expenses that may increase and decrease over sequential periods include professional services, investment advisory fees, performance-based incentive fees, and interest expense. Step-up increasing operating expenses include transfer agency services, administrative transfer agency support services, and shareholder reporting services. We expect certain operating expenses to continue to increase at a faster rate relative to fixed operating costs, either in connection with the growth in (i) the leveraged asset base (investment advisory fees and interest expense), (ii) the number of open shareholder accounts (transfer agency services, transfer agency support services, and shareholder reporting services) and (iii) the complexity of our investment processes and portfolio holdings, the reporting on our financial condition and capital structure, and the arrangement of additional borrowing capacity (financial reporting, audit and legal professional services).
 
 
39

 
 
Net investment income
 
Net investment income was $3.71 million for the three months ended June 30, 2012, or approximately $0.17 per share. Net investment income before incentive fees was $3.37 million over the same period, or $0.15 per share. There was no net investment income in the three month period ended June 30, 2011 due to the absence of investment income coupled with no net expenses after considering the impact of 100% in expense support payments.
 
Net realized gain

Net realized gain of $0.59 million for the three months ended June 30, 2012 was the result of $0.54 million from realized gain on investments and $0.05 million in net realized gain on foreign currency transactions.
 
Net unrealized depreciation
    For the three months ended June 30, 2012, there was a decrease in net unrealized depreciation of $2.22 million, comprised of a change in net unrealized depreciation on investments of $2.10 million and a change in net unrealized depreciation on foreign currency translation $0.13 million. Market-wide price movements and valuations changes are not necessarily indicative of any fundamental change in the condition or prospects of our portfolio companies. We did not record any unrealized appreciation or depreciation for the three months ended June 30, 2011.
 
Net increase in net assets resulting from operations
    We recorded an increase in net assets resulting from operations for the three months ended June 30, 2012 of $2.08 million. The increase primarily reflects (i) the increase in net investment income, (ii) some modest lift from realized gains and (iii) reduction in net assets attributable to the net unrealized depreciation for the three months ended June 30, 2012.  We did not record any net increase in net assets resulting from operations for the three months ended June 30, 2011.
 
RESULTS COMPARISONS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011
 
Investment income
 
We generated investment income of $9.63 million for the six months ended June 30, 2012, primarily consisting of interest earned on senior and subordinated debt investments held in our portfolio. We did not record any investment income for the six months ended June 30, 2011. This comparative increase in investment income is due to the growth of our portfolio since commencing operations in July 2011. The level of interest income we receive is directly related to (i) our rate of investing equity capital and borrowed funds into the investment securities of portfolio companies, (ii) the weighted average balance of interest-bearing investments throughout the period, and (iii) the weighted average yield of our investments.
 
Operating expenses
 
Our total operating expenses were $6.34 million and $0.04 million for the six months ended June 30, 2012 and 2011, respectively. Our operating expenses included $2.52 million in base management fees attributed to the investment advisory services of CNL and KKR for the six months ended June 30, 2012. Base management fees were negligible for the six months ended June 30, 2011.  Our operating expenses also include administrative services expenses attributed to CNL of $0.32 million and $0.01 million for the six months ended June 30, 2012 and 2011, respectively.
 
Our Advisors are eligible to receive incentive fees based on performance. We recorded incentive fee expense of $0.53 million for the six months ended June 30, 2012. A significant portion of incentive fees on capital gains is accrued with respect to net unrealized appreciation in our investment portfolio, although no such incentive fee is actually payable by us with respect to such net unrealized appreciation unless and until the net unrealized appreciation is actually realized. The determination of the actual amount due and payable to the Advisors is conducted at the end of the calendar year The Advisors have not received any payment of incentive fees on capital gains since the inception of the Company.
 
We recorded interest expense of $0.83 million for the six months ended June 30, 2012 and 2011 in connection with borrowing under our revolving credit facility which became effective on August 23, 2011.  Professional services expenses, primarily consisting of audit and legal fees, grew to $0.56 million in the six months ended June 30, 2012 as compared to trace expenses in the six months ended June 30, 2011, reflecting (i) an increase in routine external audit services and (ii) legal services in connection with our SEC exemptive relief application and the arrangement of our credit facility.
 
As our asset base and number of investors have grown, our general and administrative expenses have increased accordingly, but at a slower rate compared to the growth rate in the asset base. We expect certain variable operating expenses to continue to increase because of the anticipated growth in the size of our asset base and the number of open shareholder accounts.  During the six months ended June 30, 2012, the ratio of operating expenses (excluding investment advisory fees, interest expense and reimbursement of organization and offering expenses) to average net assets was 1.91%. We generally expect operating expenses to remain relatively stable as a percentage of our total assets during periods of asset growth over the next several calendar quarters. Incentive fees and interest expense, among other things, may also increase or decrease our operating expenses in relation to our expense ratios relative to comparative periods depending on portfolio performance and changes in benchmark interest rates such as LIBOR, among other factors.
 
 
40

 
Expense Support Payments and Reimbursement Payments - Expense support payments were $1.59 million and $0.04 million for the six months ended June 30, 2012 and 2011, respectively. The provisions of the Expense Support Agreement that provide for Expense Support Payments from the Advisors to us were not extended beyond June 30, 2012 at this time. (See "_Contractual Agreements, Expense Support Agreement, below for further details about the Expense Support Agreement.)  Additionally, we accrued $0.03 million as probable Reimbursement Payment obligation relative to the cumulative Expense Support Payments of $3.0 million as of June 30, 2012. The Reimbursement Payment obligation, when combined with Other Operating Expenses, results in an Other Operating Expense ratio of 1.91% as a percentage of average weighted net assets as of June 30, 2012 on an annualized basis. (See "Note 6. Agreements and Related Party Transactions" included within our condensed consolidated financial statements for additional disclosures regarding the Expense Support Payments and Reimbursement Payments.)
 
Net investment income
 
    Our net investment income totaled $4.85 million ($0.29 per share) for the six months ended June 30, 2012 and none for the six months ended 2011.
 
Net realized gain
 
We sold investments and received principal payments of $38.8 million and $9.40 million, respectively, during the six months ended June 30, 2012, from which we realized net gains of $1.27 million. Foreign currency transactions contributed an additional $0.04 million in realized gains. For the six months ended June 30, 2011, we had no realized gains or losses since investment operations had not commenced.
 
Net unrealized appreciation or depreciation
 
    For the six months ended June 30, 2012, the net change in unrealized appreciation on investments totaled $1.52 million and the net change in unrealized loss on foreign currency translation totaled $0.14 million. This change in unrealized appreciation on investments was primarily driven by the market appreciation, including tighter credit spreads, as reflected in several investment positions held in our portfolio. For the six months ended June 30, 2011, there was no net change in unrealized appreciation (depreciation) on investments and foreign currency translation.
 
Net increase in net assets resulting from operations
 
For the six months ended June 30, 2012, the net increase in net assets resulting from operations was $7.55 million ($0.46 per share) compared to no net increase in net assets resulting from operations during the six months ended June 30, 2011.
 
Net Assets, Net Asset Value per Share and Total Investment Return

 
Net assets increased $218.86 million during the six-month period ended June 30, 2012. The most significant increase in net assets during the six months ended June 30, 2012 was attributable to the new issuance of shares of common stock and reinvestment of distributions in the combined amount of $217.41 million. Net investment income contributed $4.85 million to the growth in net assets during the six months ended June 30, 2012. Other increases in net assets were attributable to (i) unrealized appreciation on investments of $1.39 million and (ii) realized gains of $1.31 million. Distributions to shareholders in the amount of $6.09 million contributed to a reduction in net assets in the six months ended June 30, 2012.
 
Our net asset value per share was $9.21 and $9.64 on December 31, 2011 and June 30, 2012, respectively. After considering (i) the overall changes in net asset value per share, (ii) paid distributions of approximately $0.43 per share in the sixth months ended June 30, 2012 (including an accrued distribution payable as of January 1, 2012), and (iii) the assumed reinvestment of those distributions at 90% of the prevailing offering price per share, then the total investment return was 8.77% (not annualized) for shareholders who held our shares over the six month period ending June 30, 2012.
 
Initial shareholders participating in the Offering with an initial investment of $10,000 and an initial purchase price equal to $9.00 per share (public offering price net of sales load) have seen the value of their investment grow by 15.9% (see chart below).  Initial shareholders participating in the Offering with an initial investment of $10,000 and an initial purchase price equal to $10.00 per share (the initial public offering price) have registered a total investment return of 4.3%.
  41

 
 
Capital Stock Activity
 
The number of shares outstanding of our common stock increased by 22.389 million shares during the six months ended June 30, 2012, including shares sold in our Offering and shares issued in connection with our distribution reinvestment plan. The public offering price was increased three times and it ranged between $10.25 per share to $10.85 per share during the six months ended June 30, 2012. Between February 28, 2012 and June 30, 2012, the public offering price remained stable at $10.85 per share and the net offering price (net of sales load) was $9.765 per share. Net asset value was $9.64 per share on June 30, 2012, or 98.7% of the net public offering price.
 
Recent Developments
 
On June 29, 2012, our board of directors declared a distribution of $0.014606 per share for 13 record dates beginning July 3, 2012 and ending on September 25, 2012. The distributions will be paid to shareholders at the end of each month.
 
On July 3, 2012, our board of directors approved a change in our repricing policy for adjusting the public offering price for our Offering based on relative movements in the net asset value per share of our common stock. In the event that the net asset value per share is persistently less than 97.5% of the net public offering price (excluding sales load) for a period of at least 10 consecutive days, then we will be obligated to reduce the public offering price in order to continue to accept subscriptions for common stock under the Offering. In the event that the net asset value per share exceeds the net public offering price (excluding sales load), then we will be obligated to increase the public offering price to ensure we do not sell shares of common stock at a price that is below the net asset value per share (no change in repricing policy).
 
OFF-BALANCE SHEET ARRANGEMENTS
 
We had no off-balance sheet arrangements as of June 30, 2012.
 
CONTRACTUAL OBLIGATIONS
 
 Investment Advisory Agreements –We have entered into the Investment Advisory Agreement with CNL for the overall management of our investment activities. We and CNL have also entered into the Sub-Advisory Agreement with KKR, under which KKR is responsible for the day-to-day management of our investment portfolio. Pursuant to the Investment Advisory Agreement, CNL earns a management fee equal to an annual rate of 2% of our average gross assets, and an incentive fee based on our performance. The incentive fee is comprised of the following two parts: (i) a subordinated incentive fee on pre-incentive fees net investment income, and (ii) an incentive fee on capital gains. CNL compensates KKR for advisory services that it provides to us with 50% of the fees that CNL receives under the Investment Advisory Agreement.
 
The terms of the Investment Advisory Agreement entitle CNL (and indirectly KKR) to receive up to 5% of gross proceeds in connection with the Offering as reimbursement for organization and offering expenses incurred by the Advisors on our behalf. The Advisors waived our requirement to reimburse them for organization and offering expenses for the period from June 17, 2011 through January 31, 2012. The waiver of the reimbursement requirements did not reduce the amount of organization and offering expenses incurred by the Advisors that are eligible for reimbursement in future periods. Beginning February 1, 2012, we implemented an expense reimbursement accrual rate equal to 0.75% of gross offering proceeds to initiate the reimbursement of organization and offering expenses incurred by the Advisors. As of June 30, 2012, the Advisors have been reimbursed in the amounts of $0.90 million for organization expenses and $0.72 million for offering expenses. As of June 30, 2012, the Advisors carried a balance of approximately $5.0 million for offering expenses incurred on our behalf, net of (i) incremental offering expenses incurred by the Advisors on our behalf and (ii) our reimbursement payments to the Advisors.
 
We will continue to reimburse the Advisors for offering expenses in connection with gross proceeds raised under the Offering only to the extent that the reimbursement payments would not cause the total organization and offering expenses borne by us to exceed 5% of the aggregate gross proceeds from our Offering. The Advisors continue to be responsible for the payment of our offering expenses to the extent they exceed 5% of the aggregate gross proceeds from the Offering, without recourse against or reimbursement by us.
 
See "Note 6 Agreements and Related Party Transactions" in our condensed consolidated financial statements for expanded discussion of the Investment Advisory Agreements.
 
Expense Support Agreement -We are party to an Expense Support and Conditional Reimbursement Agreement with CNL and KKR (as amended, the “Expense Support Agreement”) pursuant to which CNL and KKR jointly and severally agreed to reimburse us for a specified percentage of our operating expenses (an “Expense Support Payment”) during the Expense Support Payment Period beginning on June 17, 2011. On December 16, 2011, the Company and the Advisors amended the Expense Support Agreement, effective January 1, 2012, to extend the terminal date of the Expense Support Payment Period from December 31, 2011 to March 31, 2012 and reduced the operating expense reimbursement ratio from 100% to 65% of our operating expenses. This amendment also redefined Operating Expenses as all costs and expenses paid or incurred by us, as determined under GAAP, including base advisory fees payable pursuant to the Investment Advisory Agreement, and excluding (i) incentive advisory fees payable pursuant to the Investment Advisory Agreement, (ii) offering and organization expenses, and (iii) all interest costs related to indebtedness for such period. On March 16, 2012, we and the Advisors entered into an amendment and restatement of the Expense Support Agreement, effective April 1, 2012, that extended the terminal date of the Expense Support Payment Period to June 30, 2012 and reduced the operating expense reimbursement ratio from 65% to 25%. As of June 30, 2012, the Advisors had incurred $3.0 million of Expense Support Payments. The Advisors' commitment to make Expense Support Payments was not extended beyond June 30, 2012.
 
 
42

 
 
During the term of the Expense Support Agreement, the Advisors are entitled to an annual year-end reimbursement payment by us for unreimbursed Expense Support Payments made under the Agreement (a “Reimbursement Payment”), but such Reimbursement Payments may only be made within three years after the calendar year in which such Expense Support Payments are made. No Reimbursement Payment may be paid by us to the extent that it would cause our Other Operating Expenses (Other Operating Expenses is equal to Operating Expenses, but excluding base advisory fees and including a Reimbursement Payment) to exceed 1.91% of average net assets attributable to common shares as of the calendar year-end. The Expense Support Agreement also states that in no event shall we be required to make any Reimbursement Payment prior to January 1, 2013. As of June 30, 2012 we have accrued $0.03 million for probable Reimbursement Payment obligation.  As a result, the Other Operating Expense-to-average net asset ratio is equal to 1.91% as of June 30, 2012, annualized.  The Company records the liability for the Reimbursement Payments based on a hypothetical liquidation of its investment portfolio at the end of each reporting period.  Management believes that additional liabilities for Reimbursement Payments are not probable as of June 30, 2012. Management continues to periodically assess the likelihood of whether additional Reimbursement Payments are probable.
 
The Expense Support Agreement will automatically terminate in the event of (a) the termination by us of either our Investment Advisory Agreement or our Sub-Advisory Agreement, or (b) our dissolution or liquidation. If the Expense Support Agreement is terminated due to termination of the Investment Advisory Agreement or the Sub-Advisory Agreement, then we must make a Reimbursement Payment to the Advisors, pro rata based on the aggregate unreimbursed Expense Support Payments made by each Advisor.
 
Revolving Credit Facility –As discussed above under “Financial Condition, Liquidity and Capital Resources – Credit Facility,” CCT Funding has entered into a revolving credit facility with Deutsche Bank. The credit facility provides for borrowings in an aggregate amount up to $175 million on a committed basis, with an accordion feature that can increase the aggregate maximum credit commitment up to $250 million, if exercised and under certain circumstances. As of June 30, 2012, $77.94 million was borrowed and outstanding under the credit facility. (See  “— Liquidity and Capital Resources — Credit Facility” above and "Note 11. Revolving Credit Facility and Borrowings " in our condensed consolidated financial statements for expanded discussion of the revolving credit facility.)
 
    A summary of our significant contractual payment obligations for the repayment of outstanding borrowings and interest expense and other fees related to the credit facility at June 30, 2012 is as follows:
 
   
Total
   
< 1 year
   
1-3 years
   
3-5 years
   
After 5 years
 
Revolving Credit Facility (1)
  $ 77.94     $     $ 77.94     $     $  
Interest and Credit Facility Fees Payable
    0.07       0.07                    
 
 
(1)
At June 30, 2012 our unused commitment amount was $97.06 million under our revolving credit facility.
 
Quantitative and Qualitative Disclosures about Market Risks
 
    We are subject to financial market risks, in particular changes in interest rates. Future changes in interest rates will likely have effects on the interest income we earn on our portfolio investments, the fair value of our fixed income investments, the interest rates and interest expenses associates with the money we borrow for investment purposes, and the fair value of loan balances.
 
    Subject to the requirements of the 1940 Act, we may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. Although hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates. During the period from January 1, 2012 to June 30, 2012, we did not engage in interest rate hedging activities.
 
Interest Rates: Assets
 
As of June 30, 2012, approximately 49.0% of our portfolio of debt investments, or approximately $198.5 million measured at fair value, featured floating or variable interest rates. The variable interest rate investments are usually based on a floating LIBOR (the base rate) and typically have durations of three months after which the base rates are reset to current market interest rates. At June 30, 2012, approximately 82.1% of our portfolio of variable interest rate debt investments, or approximately $163.1 million measured at fair value, featured minimum base rates, or base rate floors, and the weighted average base rate floor for such investments was 1.53%. Variable interest rate investments that feature a base rate floor generally reset to the current base rate only if the reset base rate exceeds the base rate floor on the applicable interest reset date, in which cases we may benefit through an increase in interest income from such investments after the interest reset date.
 
    At June 30, 2012, we held an aggregate investment position of $35.5 million at fair value in variable interest rate debt investments that featured variable interest rates without any minimum base rates, or approximately 17.9% of our portfolio of variable interest rate debt investments.  In the case of these "no base floor" variable interest debt investments held in our portfolio, we may benefit from increases in the base rates that may subsequently result in an increase in interest income  after the interest reset date.

 
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Assuming that the condensed consolidated schedule of investments as of June 30, 2012 was to remain constant with regards to the investment portfolio and no actions were taken to alter the existing interest rate sensitivity or investment portfolio allocations, the table below presents an estimated and hypothetical increase in interest income due to an immediate and persistent 12-month increase in the base rates associated with our debt investments featuring variable interest rates.
 
 
   Par
Amount
     Weighted
Avg. Floor
   
Increases in Short-Term LIBOR
 
($ in millions except per share data)
         
+ 50 bps
   
+ 100 bps
   
+ 150 bps
   
+ 200 bps
 
No base rate floor
  $ 35.46           $ 0.164     $ 0.327     $ 0.491     $ 0.655  
Base rate floor
  $ 163.07       1.53%       0.000       0.124       0.728       1.388  
Increase in Floating Rate Interest Income
                    0.164       0.452       1.219       2.042  
                                                 
           
LIBOR + Spread
                                 
Tranche A Loans
  $ 75.00    
L(30) + 170 bps
    $ (0.375 )   $ (0.750 )   $ (1.125 )   $ (1.500 )
Tranche B Loans
  $ 2.94    
L(90) + 235 bps
      (0.015 )     (0.029 )     (0.044 )     (0.059 )
Increase to Floating Rate Interest Expense
                    (0.390 )     (0.779 )     (1.169 )     (1.559 )
                                                 
Change in Floating Rate Net Interest Income
    $ (0.226 )   $ (0.328 )   $ 0.050     $ 0.483  
Change in Floating Rate Net Interest Income per share outstanding as of June 30, 2012
    $ (0.01 )   $ (0.01 )   $ 0.00     $ 0.02  
 
 In addition, any fluctuations in prevailing interest rates may affect the fair value of our fixed rate debt instruments and result in changes in unrealized gains and losses, and may affect a net increase or decrease in net assets resulting from operations. Such changes in unrealized appreciation and depreciation will materialize into realized gains and losses if we are compelled to sell our investments before the debt maturity date.
 
    Although management believes that this analysis and presentation is indicative of our interest income sensitivity to interest rate changes in relation to our assets as of June 30, 2012, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets on the consolidated statements of assets and liabilities and other business developments that could affect net investment income and net increases in net assets resulting from operations. Accordingly, no assurances can be given that actual results would not differ materially from the estimates above. Additionally, an increase in interest rates and interest income should make it easier for us to meet or exceed our quarterly preferred return that triggers the quarterly subordinated incentive fee on income, as defined in our investment advisory agreement, and may result in a substantial increase in our net investment income and the amount of incentive fees payable to our Advisors with respect to an increase in pre-incentive fee net investment income.
 
Interest Rates: Liabilities (Borrowings)
 
Because we borrow money to make investments, our net investment income is partially dependent upon the difference between the interest rate at which we invest borrowed funds and the interest rate at which we borrow funds. In periods of rising interest rates and when we have borrowed capital with floating interest rates, then our interest expense would increase, which could increase our financing costs and reduce our net investment income, especially to the extent we continue to acquire and hold fixed-rate debt investments. As a result, 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. Pursuant to the terms of our revolving credit facility agreement as discussed above (see “— Financial Condition, Liquidity and Capital Resources — Credit Facility”), as of June 30, 2012, CCT Funding borrows at a floating base rate of (i) 30-day LIBOR plus 1.70% for Tranche A Loans ($75.0 million loan balance outstanding) and (ii) 90-day LIBOR plus 2.35% for Tranche B Loans ($2.94 million loan balance outstanding and $97.06 million unused commitment). Therefore, if we were to completely draw down the unused Trance B Loans commitment, we expect that our weighted average direct interest cost will increase by approximately 46 basis points, or more, as compared to our current weighted average direct interest cost for borrowed funds. We expect that any expansion of the current revolving credit facility, or any future credit facilities that we or any subsidiary may enter into, will also be based on a floating base rate. As a result, we are subject to continuous risks relating to changes in market interest rates.
 
    The exhibit above also presents sensitivity analysis for a persistent 12-month increase in the base interest rates that apply to our floating rate credit facility and the associated increase in interest expense.  For persistent LIBOR increases of less than 100 basis points, the increase in interest expense may be partially offset by the hypothetical increase in interest income associated with our floating rate debt investments; for a persistent LIBOR increase greater than 150 basis points, then the increase in interest expense may be wholly offset by the hypothetical increase in interest income associated with our floating rate debt investments, in both cases assuming that the condensed consolidated schedule of investments as of June 30, 2012 was to remain constant with regards to the investment portfolio and no actions were taken to alter the existing interest rate sensitivity or investment portfolio allocations.

 
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Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Pursuant to Rule 13a-15(b) under the Exchange Act of 1934, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.
 
We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.
 
Changes in Internal Control over Financial Reporting
 
In the most recent fiscal quarter, there was no change in our internal controls over financial reporting (as defined under Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
 
Legal Proceedings - None
 
Risk Factors  - None
 
Unregistered Sales of Equity Securities and Use of Proceeds - None
 
Defaults Upon Senior Securities - None
 
Mine Safety Disclosures – Not applicable
 
Other Information - None
 
Exhibits
 
The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.
 
 
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 13th day of August, 2012.
 
CORPORATE CAPITAL TRUST, INC.
   
By: 
 
/s/ Andrew A. Hyltin
   
ANDREW A. HYLTIN
   
Chief Executive Officer
   
(Principal Executive Officer)
     
By:
 
/s/ Paul S. Saint-Pierre
   
PAUL S. SAINT-PIERRE
   
Chief Financial Officer
   
(Principal Financial Officer)
 
 
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The following exhibits are filed or incorporated as part of this report.
 
 
3.1
  
 
Second Amended and Restated Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed on May 8, 2012.)
   
 
3.2
  
 
Amended and Restated Bylaws of the Registrant. (Incorporated by reference to Exhibit 2(b) filed with Amendment No. 3 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on March 29, 2011.)
   
 
10.1
  
 
Form of Managing Dealer Agreement by and between Registrant and CNL Securities Corp. (Incorporated by reference to Exhibit 2(h)(1) filed with Amendment No. 2 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on February 18, 2011.)
   
 
10.2
  
 
Form of Participating Broker Agreement. (Incorporated by reference to Exhibit 2(h)(2) filed with Amendment No. 2 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on February 18, 2011.)
   
 
10.3
  
 
Form of Distribution Reinvestment Plan. (Incorporated by reference to Exhibit 2(e) filed with Amendment No. 2 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on February 18, 2011.)
   
 
10.4
  
 
Intellectual Property License Agreement by and between Registrant and CNL Intellectual Properties, Inc. (Incorporated by reference to Exhibit 2(k)(3) filed with Amendment No. 2 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on February 18, 2011.)
   
 
10.5
  
 
Administrative Services Agreement by and between the Registrant and CNL Fund Advisors Company. (Incorporated by reference to Exhibit 2(k)(2) filed with Amendment No. 3 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on March 29, 2011.)
   
 
10.6
  
 
Custodian Agreement. (Incorporated by reference to Exhibit 2(j) filed with Amendment No. 3 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on March 29, 2011.)
   
 
10.7
  
 
Investment Advisory Agreement by and between Registrant and CNL Fund Advisors Company. (Incorporated by reference to Exhibit 2(g)(1) filed with Amendment No. 3 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on March 29, 2011.)
   
 
10.8
  
 
Sub-Advisory Agreement by and among the Registrant, CNL Fund Advisors Company and KKR Asset Management LLC. (Incorporated by reference to Exhibit 2(g)(2) filed with Amendment No. 3 to the Company’s registration statement on Form N-2 (File No. 333-167730) filed on March 29, 2011.)
   
 
10.9
  
 
Amended and Restated Escrow Agreement by and among Registrant, UMB Bank N.A., and CNL Securities Corp . (Incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed on August 12, 2011.)
   
 
10.10
  
 
Selected Dealer Agreement among the Registrant, CNL Securities Corp., CNL Fund Advisors Company, CNL Financial Group, LLC, KKR Asset Management LLC and Ameriprise Financial Services, Inc. (Incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.) (Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the SEC.)
   
 
10.11
  
 
Limited Liability Company Agreement of CCT Funding LLC. (Incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.)
   
 
10.12
  
 
Credit Agreement between CCT Funding LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.) (Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the SEC.)
         
 
10.13
  
 
Custodial Agreement among the Registrant, CCT Funding LLC, Deutsche Bank AG, New York Branch and Deutsche Bank Trust Company Americas. (Incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.) (Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the SEC.)
   
 
10.14
  
 
Asset Contribution Agreement between the Registrant and CCT Funding LLC. (Incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.)
   
 
10.15
  
 
Security Agreement between CCT Funding LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.)
   
 
10.16
  
 
Investment Management Agreement between the Registrant and CCT Funding LLC. (Incorporated by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2011.)

 
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10.17
  
 
First Amendment to Credit Agreement between CCT Funding LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed on March 16, 2012.) (Confidential portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the SEC.)
   
 
10.18
  
 
Amended and Restated Expense Support and Conditional Reimbursement Agreement by and among the Registrant, CNL Fund Advisors Company and KKR Asset Management LLC. (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed on March 16, 2012.)
   
 
10.19
  
 
Amendment No. 1 to Investment Advisory Agreement by and between Registrant and CNL Fund Advisors Company. (Incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed on March 16, 2012.)
   
 
  
 
   
 
  
 
   
 
  
 
 
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