Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2011

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

For the transition period from to

Commission file number 814-00733

Triangle Capital Corporation

(Exact name of registrant as specified in its charter)


Maryland		06-1798488
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3700 Glenwood Avenue, Suite 530 Raleigh, North Carolina (Address of principal executive offices)		27612 (Zip Code)
		27612 (Zip Code)

Registrant’s telephone number, including area code:

(919) 719-4770

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report:

N/A

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

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

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


Large accelerated filer ¨	Accelerated filer þ	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a 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 þ

The number of shares outstanding of the registrant’s Common Stock on October 31, 2011 was 22,714,851.

TRIANGLE CAPITAL CORPORATION

TABLE OF CONTENTS

QUARTERLY REPORT ON FORM 10-Q


		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheet as of September 30, 2011 and Consolidated Balance Sheet as of December 31, 2010		3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010		4
	Unaudited Consolidated Statements of Changes in Net Assets for the Nine Months Ended September 30, 2011 and 2010		5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010		6
	Unaudited Consolidated Schedule of Investments as of September 30, 2011		7
	Consolidated Schedule of Investments as of December 31, 2010		12
	Notes to Unaudited Consolidated Financial Statements		17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		39
Item 4.	Controls and Procedures		40

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		41
Item 1A.	Risk Factors		41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	[Removed and Reserved]		43
Item 5.	Other Information		43
Item 6.	Exhibits		44
Signatures			45
Exhibits

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements.

TRIANGLE CAPITAL CORPORATION

Consolidated Balance Sheets


	September 30, 2011		December 31, 2010
	(Unaudited)
Assets
Investments at fair value:
Non-Control / Non-Affiliate investments (cost of $347,512,108 and $244,197,828 at September 30, 2011 and December 31, 2010, respectively)	$	355,987,618	$	245,392,144
Affiliate investments (cost of $98,595,888 and $60,196,084 at September 30, 2011 and December 31, 2010, respectively)		101,105,447		55,661,878
Control investments (cost of $11,273,513 and $19,647,795 at September 30, 2011 and December 31, 2010, respectively)		7,287,251		24,936,571

Total investments at fair value		464,380,316		325,990,593
Cash and cash equivalents		85,449,077		54,820,222
Interest and fees receivable		2,328,572		867,627
Prepaid expenses and other current assets		508,278		119,151
Deferred financing fees		6,741,219		6,200,254
Property and equipment, net		49,744		47,647

Total assets	$	559,457,206	$	388,045,494

Liabilities
Accounts payable and accrued liabilities	$	2,661,947	$	2,268,898
Interest payable		814,105		2,388,505
Taxes payable		6,307		197,979
Deferred revenue		45,218		37,500
Deferred income taxes		291,760		208,587
SBA-guaranteed debentures payable		224,193,394		202,464,866

Total liabilities		228,012,731		207,566,335
Net Assets
Common stock, $0.001 par value per share (150,000,000 shares authorized, 22,714,851 and 14,928,987 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively)		22,715		14,929
Additional paid-in-capital		316,103,812		183,602,755
Investment income in excess of distributions		5,860,838		3,365,548
Accumulated realized gain (loss) on investments		2,750,063		(8,244,376	)
Net unrealized appreciation of investments		6,707,047		1,740,303

Total net assets		331,444,475		180,479,159

Total liabilities and net assets	$	559,457,206	$	388,045,494

Net asset value per share	$	14.59	$	12.09

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Operations


	Three Months Ended September 30, 2011			Three Months Ended September 30, 2010			Nine months ended September 30, 2011		Nine months ended September 30, 2010
Investment income:
Loan interest, fee and dividend income:
Non-Control / Non-Affiliate investments	$	10,715,995		$	6,654,541		$	30,690,335	$	16,673,386
Affiliate investments		2,409,455			1,044,088			5,508,253		3,152,758
Control investments		96,535			333,993			1,243,396		1,056,463

Total loan interest, fee and dividend income		13,221,985			8,032,622			37,441,984		20,882,607
Paid-in-kind interest income:
Non-Control / Non-Affiliate investments		2,217,084			1,338,018			5,585,410		3,301,525
Affiliate investments		668,660			231,525			1,613,555		797,448
Control investments		18,592			117,419			137,393		377,276

Total paid-in-kind interest income		2,904,336			1,686,962			7,336,358		4,476,249
Interest income from cash and cash equivalent investments		94,489			67,501			281,611		207,283

Total investment income		16,220,810			9,787,085			45,059,953		25,566,139

Expenses:
Interest expense		2,698,571			1,864,442			7,229,924		5,442,426
Amortization of deferred financing fees		202,518			469,394			724,663		665,455
General and administrative expenses		2,927,465			1,840,794			8,761,462		5,493,495

Total expenses		5,828,554			4,174,630			16,716,049		11,601,376

Net investment income		10,392,256			5,612,455			28,343,904		13,964,763
Net realized gain (loss) on investments — Non Control / Non-Affiliate		1,011,649			1,210,481			1,839,248		(1,623,104	)
Net realized gain (loss) on investments — Control		(2,997,979	)		—			9,155,191		—
Net realized gain (loss) on investments — Affiliate		—			(19,100	)		—		3,522,138
Net unrealized appreciation of investments		9,030,048			358,936			4,966,744		2,408,328

Total net gain on investments before income taxes		7,043,718			1,550,317			15,961,183		4,307,362
Income tax benefit (provision)		34,269			20,410			61,628		(72,334	)

Net increase in net assets resulting from operations	$	17,470,243		$	7,183,182		$	44,366,715	$	18,199,791

Net investment income per share — basic and diluted	$	0.52		$	0.46		$	1.53	$	1.16

Net increase in net assets resulting from operations per share — basic and diluted	$	0.87		$	0.59		$	2.40	$	1.51

Dividends declared per common share	$	0.44		$	0.41		$	1.30	$	1.23

Weighted average number of shares outstanding — basic and diluted		20,015,230			12,258,614			18,489,842		12,047,852

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Changes in Net Assets


	Common Stock						Additional Paid In Capital			Investment Income in Excess of (Less Than) Distributions			Accumulated Realized Gains (Losses) on Investments		Net Unrealized Appreciation (Depreciation) of Investments			Total Net Assets
	Number of Shares			Par Value			Additional Paid In Capital			Investment Income in Excess of (Less Than) Distributions			Accumulated Realized Gains (Losses) on Investments		Net Unrealized Appreciation (Depreciation) of Investments			Total Net Assets
Balance, January 1, 2010		11,702,511		$	11,703		$	136,769,259		$	1,070,452		$	448,164	$	(9,200,386	)	$	129,099,192
Net investment income		—			—			—			13,964,763			—		—			13,964,763
Stock-based compensation		—			—			848,623			—			—		—			848,623
Net realized gain on investments		—			—			—			—			1,899,034		(729,858	)		1,169,176
Net unrealized gain on investments		—			—			—			—			—		3,138,186			3,138,186
Provision for income taxes		—			—			—			(72,334	)		—		—			(72,334	)
Dividends/distributions declared		288,296			288			4,033,216			(14,767,466	)		—		—			(10,733,962	)
Public offering of common stock		2,760,000			2,760			41,247,329			—			—		—			41,250,089
Issuance of restricted stock		152,944			153			(153	)		—			—		—			—
Common stock withheld for payroll taxes upon vesting of restricted stock		(18,617	)		(19	)		(234,893	)		—			—		—			(234,912	)

Balance, September 30, 2010		14,885,134		$	14,885		$	182,663,381		$	195,415		$	2,347,198	$	(6,792,058	)	$	178,428,821


	Common Stock						Additional Paid In Capital			Investment Income in Excess of (Less Than) Distributions			Accumulated Realized Gains (Losses) on Investments			Net Unrealized Appreciation (Depreciation) of Investments			Total Net Assets
	Number of Shares			Par Value			Additional Paid In Capital						Accumulated Realized Gains (Losses) on Investments						Total Net Assets
Balance, January 1, 2011		14,928,987		$	14,929		$	183,602,755		$	3,365,548		$	(8,244,376	)	$	1,740,303		$	180,479,159
Net investment income		—			—			—			28,343,904			—			—			28,343,904
Stock-based compensation		—			—			1,409,654			—			—			—			1,409,654
Net realized gain on investments		—			—			—			—			10,994,439			(9,250,107	)		1,744,332
Net unrealized gain on investments		—			—			—			—			—			14,216,851			14,216,851
Income tax benefit		—			—			—			61,628			—			—			61,628
Dividends/distributions declared		181,755			182			3,082,442			(25,910,242	)		—			—			(22,827,618	)
Public offering of common stock		7,475,000			7,475			128,652,398			—			—			—			128,659,873
Issuance of restricted stock		161,174			161			(161	)		—			—			—			—
Common stock withheld for payroll taxes upon vesting of restricted stock		(32,065	)		(32	)		(643,276	)		—			—			—			(643,308	)

Balance, September 30, 2011		22,714,851		$	22,715		$	316,103,812		$	5,860,838		$	2,750,063		$	6,707,047		$	331,444,475

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Statements of Cash Flows


	Nine months ended September 30, 2011			Nine months ended September 30, 2010
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	44,366,715		$	18,199,791
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchases of portfolio investments		(184,144,674	)		(88,215,260	)
Repayments received/sales of portfolio investments		63,434,578			53,975,274
Loan origination and other loan discounts and fees received		3,689,444			1,713,818
Net realized gain on investments		(10,994,439	)		(1,899,034	)
Net unrealized appreciation of investments		(5,049,919	)		(2,042,248	)
Deferred income taxes		83,173			(366,080	)
Payment-in-kind interest accrued, net of payments received		(3,452,028	)		(1,249,763	)
Amortization of deferred financing fees		724,663			665,455
Accretion of loan origination and other fees		(1,029,151	)		(1,065,703	)
Accretion of loan discounts		(843,534	)		(477,513	)
Accretion of discount on SBA-guaranteed debentures payable		128,528			7,548
Depreciation expense		21,170			13,569
Stock-based compensation		1,409,654			848,623
Changes in operating assets and liabilities:
Interest and fees receivable		(1,460,945	)		73,069
Prepaid expenses		(389,127	)		46,781
Accounts payable and accrued liabilities		393,049			(594,384	)
Interest payable		(1,574,400	)		(1,809,633	)
Deferred revenue		7,718			(27,500	)
Taxes payable		(191,672	)		(9,605	)

Net cash used in operating activities		(94,871,197	)		(22,212,795	)

Cash flows from investing activities:
Purchases of property and equipment		(23,267	)		(30,705	)

Net cash used in investing activities		(23,267	)		(30,705	)

Cash flows from financing activities:
Borrowings under SBA-guaranteed debentures payable		31,100,000			39,403,918
Repayments of SBA-guaranteed debentures payable		(9,500,000	)		(22,300,000	)
Financing fees paid		(1,265,628	)		(1,480,307	)
Proceeds from public stock offerings, net of expenses		128,659,873			41,250,089
Common stock withheld for payroll taxes upon vesting of restricted stock		(643,308	)		(234,912	)
Cash dividends paid		(22,827,618	)		(15,508,496	)

Net cash provided by financing activities		125,523,319			41,130,292

Net increase in cash and cash equivalents		30,628,855			18,886,792
Cash and cash equivalents, beginning of period		54,820,222			55,200,421

Cash and cash equivalents, end of period	$	85,449,077		$	74,087,213

Supplemental disclosure of cash flow information:
Cash paid for interest	$	8,675,796		$	7,244,511

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments

September 30, 2011


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
*Non–Control / Non–Affiliate Investments:*
Ambient Air Corporation (“AA”) and Peaden-Hobbs Mechanical, LLC (“PHM”) (2%)*	Specialty Trade Contractors	Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)	$	4,096,288	$	4,068,226	$	4,068,226
		Subordinated Note-PHM (12% Cash, Due 09/12)		12,857		12,857		12,857
		Common Stock-PHM (128,571 shares)				128,571		116,000
		Common Stock Warrants-AA (455 shares)				142,361		1,286,000

				4,109,145		4,352,015		5,483,083
Ann’s House of Nuts, Inc. (3%)*	Trail Mixes and Nut Producers	Subordinated Note (12% Cash, 1% PIK, Due 11/17)		7,062,989		6,687,913		6,687,913
		Preferred A Units (22,368 units)				2,124,957		1,946,000
		Preferred B Units (10,380 units)				986,059		927,000
		Common Units (190,935 units)				150,000		331,000
		Common Stock Warrants (14,558 shares)				14,558		32,000

				7,062,989		9,963,487		9,923,913
Aramsco, Inc. (1%)	Environmental Emergency Preparedness Products Distributor	Subordinated Note (12% Cash, 2% PIK, Due 03/14)		1,854,433		1,714,508		1,714,508

				1,854,433		1,714,508		1,714,508

Assurance Operations Corporation (0%)*	Metal Fabrication	Common Stock (517 Shares)				516,867		598,000

						516,867		598,000
BioSan Laboratories, Inc. (2%)*	Nutritional Supplement Manufacturing and Distribution	Subordinated Note (12% Cash, 3.8% PIK, Due 10/16)		5,226,211		5,126,100		5,126,100

				5,226,211		5,126,100		5,126,100

Botanical Laboratories, Inc. (3%)*	Nutritional Supplement Manufacturing and Distribution	Senior Notes (14% Cash, 1% PIK, Due 02/15)		10,219,750		9,653,378		9,155,000
		Common Unit Warrants (998,680 Units)				474,600		—

				10,219,750		10,127,978		9,155,000
Capital Contractors, Inc. (3%)*	Janitorial and Facilities Maintenance Services	Subordinated Notes (12% Cash, 2% PIK, Due 12/15)		9,138,438		8,543,739		8,543,739
		Common Stock Warrants (20 shares)				492,000		359,000

				9,138,438		9,035,739		8,902,739
Carolina Beverage Group, LLC (4%)*	Beverage Manufacturing and Packaging	Subordinated Note (12% Cash, 4% PIK, Due 02/16)		13,126,711		12,911,919		12,911,919
		Class A Units (11,974 Units)				1,077,615		965,000
		Class B Units (11,974 Units)				119,735		—

				13,126,711		14,109,269		13,876,919
CRS Reprocessing, LLC (8%)*	Fluid Reprocessing Services	Subordinated Note (12% Cash, 2% PIK, Due 11/15)		11,299,409		10,941,218		10,941,218
		Subordinated Note (10% Cash, 4% PIK, Due 11/15)		10,904,732		9,860,107		9,860,107
		Series C Preferred Units (13 Units)				122,377		210,000
		Common Unit Warrant (550 Units)				1,253,556		4,900,000

				22,204,141		22,177,258		25,911,325
CV Holdings, LLC (5%)*	Specialty Healthcare Products Manufacturer	Subordinated Note (12% Cash, 4% PIK, Due 09/13)		9,184,844		8,696,779		8,696,779
		Subordinated Note (12% Cash, Due 09/13)		6,000,000		5,901,250		5,901,250
		Royalty rights				874,400		881,000

				15,184,844		15,472,429		15,479,029
DLR Restaurants, LLC (3%)*	Restaurant	Subordinated Note (12% Cash, 2% PIK, Due 03/16)		9,102,496		8,880,628		8,880,628
		Royalty rights				—		—

				9,102,496		8,880,628		8,880,628
Electronic Systems Protection, Inc. (2%)*	Power Protection Systems Manufacturing	Subordinated Note (12% Cash, 2% PIK, Due 12/15)		4,142,089		4,105,989		4,105,989
		Senior Note (8.3% Cash, Due 01/14)		794,192		794,192		794,192
		Common Stock (570 shares)				285,000		290,000

				4,936,281		5,185,181		5,190,181

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
Frozen Specialties, Inc. (2%)*	Frozen Foods Manufacturer	Subordinated Note (13% Cash, 5% PIK, Due 07/14)	$	8,371,308	$	8,277,159	$	8,277,159

				8,371,308		8,277,159		8,277,159

Garden Fresh Restaurant Corp. (0%)*	Restaurant	Membership Units (5,000 units)				500,000		748,000

						500,000		748,000

Great Expressions Group Holdings, LLC (0%)*	Dental Practice Management	Class A Units (225 Units)				450,000		821,000

						450,000		821,000
Grindmaster-Cecilware Corp. (2%)*	Food Services Equipment Manufacturer	Subordinated Note (12% Cash, 4.5% PIK, Due 04/16)		6,202,745		6,121,891		6,121,891

				6,202,745		6,121,891		6,121,891

Hatch Chile Co., LLC (2%)*	Food Products Distributor	Senior Note (19% Cash, Due 07/15)		4,500,000		4,406,706		4,406,706
		Subordinated Note (14% Cash, Due 07/15)		1,000,000		858,346		858,346
		Unit Purchase Warrant (5,265 Units)				149,800		123,000

				5,500,000		5,414,852		5,388,052
Home Physicians, LLC (“HP”) and Home Physicians Holdings, LP (“HPH”) (3%)*	In-home primary care physician services	Subordinated Note-HP (12% Cash, 5% PIK, Due 03/16)		10,519,113		10,311,112		10,311,112
		Subordinated Note-HPH (4% Cash, 6% PIK, Due 03/16)		1,264,306		1,264,306		1,264,306
		Royalty rights				—		—

				11,783,419		11,575,418		11,575,418
Infrastructure Corporation of America, Inc. (3%)*	Roadway Maintenance, Repair and Engineering Services	Subordinated Note (12% Cash, 1% PIK, Due 10/15)		10,851,061		9,796,736		9,796,736
		Common Stock Purchase Warrant (199,526 shares)				980,000		1,114,000

				10,851,061		10,776,736		10,910,736
Inland Pipe Rehabilitation Holding Company LLC (7%)*	Cleaning and Repair Services	Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)		20,148,745		19,858,293		19,858,293
		Membership Interest Purchase Warrant (3.0%)				853,500		2,149,000

				20,148,745		20,711,793		22,007,293
Library Systems & Services, LLC (2%)*	Municipal Business Services	Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)		5,429,157		5,302,459		5,302,459
		Common Stock Warrants (112 shares)				58,995		475,000

				5,429,157		5,361,454		5,777,459
Magpul Industries Corp. (4%)	Firearm Accessories Manufacturer and Distributor	Subordinated Note (12% Cash, 3% PIK, Due 03/17)		13,318,842		13,052,842		13,052,842
		Preferred Units (1,470 Units)				1,470,000		1,470,000
		Common Units (30,000 Units)				30,000		30,000

				13,318,842		14,552,842		14,552,842
McKenzie Sports Products, LLC (2%)*	Taxidermy Manufacturer	Subordinated Note (13% Cash, 1% PIK, Due 10/17)		6,056,364		5,947,668		5,947,668

				6,056,364		5,947,668		5,947,668
Media Temple, Inc. (5%)*	Web Hosting Services	Subordinated Note (12% Cash, 5.5% PIK, Due 04/15)		8,800,000		8,649,664		8,649,664
	Web Hosting Services	Convertible Note (8% Cash, 6% PIK, Due 04/15)		3,200,000		2,749,850		4,455,000
		Common Stock Purchase Warrant (28,000 Shares)				536,000		1,949,000

				12,000,000		11,935,514		15,053,664
Minco Technology Labs, LLC (2%)*	Semiconductor Distribution	Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)		5,229,000		5,122,775		5,122,775
	Semiconductor Distribution	Class A Units (5,000 Units)				500,000		141,000

				5,229,000		5,622,775		5,263,775
National Investment Managers Inc. (4%)*	Retirement Plan Administrator	Subordinated Note (11% Cash, 5% PIK, Due 09/16)		11,555,382		11,293,341		11,293,341
		Preferred A Units (90,000 Units)				900,000		635,000
		Common Units (10,000 Units)				100,000		—

				11,555,382		12,293,341		11,928,341

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
Novolyte Technologies, Inc. (3%)*	Specialty Manufacturing	Subordinated Note (12% Cash, 4% PIK, Due 07/16)	$	7,190,677	$	7,064,847	$	7,064,847
		Subordinated Note (12% Cash, 4% PIK, Due 07/16)		2,311,289		2,270,844		2,270,844
		Preferred Units (641 units)				661,227		737,000
		Common Units (24,522 units)				165,306		56,000

				9,501,966		10,162,224		10,128,691
Pomeroy IT Solutions (3%)*	Information Technology Outsourcing Services	Subordinated Notes (13% Cash, 2% PIK, Due 02/16)		10,129,425		9,892,733		9,892,733

				10,129,425		9,892,733		9,892,733
PowerDirect Marketing, LLC (3%)*	Marketing Services	Subordinated Note (12% Cash, 2% PIK, Due 05/16)		8,059,729		7,518,118		7,518,118
	Marketing Services	Common Unit Purchase Warrants				402,000		884,000

				8,059,729		7,920,118		8,402,118
Renew Life Formulas, Inc. (4%)*	Nutritional Supplement Manufacturing and Distribution	Subordinated Notes (12% Cash, 3% PIK, Due 03/15)		13,598,352		13,337,303		13,337,303

				13,598,352		13,337,303		13,337,303
SRC, Inc. (3%)*	Specialty Chemical Manufacturer	Subordinated Notes (12% Cash, 2% PIK, Due 09/14)		8,835,415		8,578,969		8,578,969
		Common Stock Purchase Warrants				123,800		—

				8,835,415		8,702,769		8,578,969
Syrgis Holdings, Inc. (1%)*	Specialty Chemical Manufacturer	Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14)		2,444,766		2,435,774		2,435,774
		Class C Units (2,114 units)				1,000,000		1,472,000

				2,444,766		3,435,774		3,907,774

TBG Anesthesia Management, LLC (3%)*	Physician Management Services	Senior Note (13.5% Cash, Due 11/14)		10,750,000		10,423,418		10,423,418
TBG Anesthesia Management, LLC (3%)*		Warrant (263 shares)				276,100		231,000

				10,750,000		10,699,518		10,654,418
TMR Automotive Service Supply, LLC (1%)	Automotive Supplies	Subordinated Note (12% Cash, 1% PIK, Due 03/16)		5,000,000		4,727,286		4,727,286
		Unit Purchase Warrant (329,518 units)				195,000		195,000

				5,000,000		4,922,286		4,922,286
Top Knobs USA, Inc. (3%)	Hardware Designer and Distributor	Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)		10,252,381		10,083,362		10,083,362
		Common Stock (26,593 shares)				750,000		545,000

				10,252,381		10,833,362		10,628,362
TrustHouse Services Group, Inc. (4%)*	Food Management Services	Subordinated Note (12% Cash, 2% PIK, Due 07/18)		13,294,167		13,063,941		13,063,941
		Class A Units (1,557 units)				512,124		685,000
		Class B Units (82 units)				26,954		25,000

				13,294,167		13,603,019		13,773,941
Tulsa Inspection Resources, Inc. (2%)*	Pipeline Inspection Services	Subordinated Note (14%-17.5% Cash, Due 03/14)		5,810,588		5,552,317		5,552,317
		Common Unit (1 unit)				200,000		—
		Common Stock Warrants (8 shares)				321,000		—

				5,810,588		6,073,317		5,552,317
Twin-Star International, Inc. (2%)*	Consumer Home Furnishings Manufacturer	Subordinated Note (12% Cash, 1% PIK, Due 04/14)		4,500,000		4,472,469		4,472,469
		Senior Note (4.3%, Due 04/13)		1,054,990		1,054,990		1,054,990

				5,554,990		5,527,459		5,527,459
Wholesale Floors, Inc. (1%)*	Commercial Services	Subordinated Note (12.5% Cash, 3.5% PIK, Due 06/14)		3,878,831		3,497,055		3,497,055
		Membership Interest Purchase Warrant (4.0%)				132,800		—

				3,878,831		3,629,855		3,497,055
Yellowstone Landscape Group, Inc. (4%)*	Landscaping Services	Subordinated Note (12% Cash, 3% PIK, Due 04/14)		12,720,816		12,569,469		12,569,469

				12,720,816		12,569,469		12,569,469

Subtotal Non–Control / Non–Affiliate Investments				338,442,888		347,512,108		355,987,618

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
*Affiliate Investments:*

American De-Rosa Lamparts, LLC and Hallmark Lighting (1%)*	Wholesale and Distribution	Subordinated Note (10% PIK, Due 10/13)	$	5,904,609	$	5,197,958	$	4,624,999
American De-Rosa Lamparts, LLC and Hallmark Lighting (1%)*	Wholesale and Distribution	Membership Units (6,516 Units)				350,000		—

				5,904,609		5,547,958		4,624,999
AP Services, Inc. (2%)*	Fluid Sealing Supplies and Services	Subordinated Note (12% Cash, 2% PIK, Due 09/15)		5,923,971		5,826,032		5,826,032
		Class A Units (933 units)				933,333		1,053,000
		Class B Units (496 units)				—		103,000

				5,923,971		6,759,365		6,982,032
Asset Point, LLC (2%)*	Asset Management Software Provider	Senior Note (12% Cash, 5% PIK, Due 03/13)		5,978,233		5,941,819		5,941,819
		Senior Note (12% Cash, 2% PIK, Due 07/15)		614,426		614,426		510,000
		Subordinated Note (7% Cash, Due 09/15)		941,798		941,798		758,000
		Membership Units (1,000,000 units)				8,203		297,000
		Options to Purchase Membership Units (342,407 units)				500,000		130,000
		Membership Unit Warrants (356,506 units)				—		2,000

				7,534,457		8,006,246		7,638,819

Axxiom Manufacturing, Inc. (0%)*	Industrial Equipment Manufacturer	Common Stock (136,400 shares)				200,000		1,108,000
		Common Stock Warrant (4,000 shares)				—		32,000

						200,000		1,140,000
Brantley Transportation, LLC (“Brantley Transportation”) and Pine Street Holdings, LLC (“Pine Street”) (4) (1%)*	Oil and Gas Services	Subordinated Note — Brantley Transportation (14% Cash, 5% PIK, Due 12/12)		3,897,612		3,857,698		3,857,698
		Common Unit Warrants — Brantley Transportation (4,560 common units)				33,600		337,000
		Preferred Units — Pine Street (200 units)				200,000		572,000
		Common Unit Warrants — Pine Street (2,220 units)				—		54,000

				3,897,612		4,091,298		4,820,698
Captek Softgel International, Inc. (3%)*	Nutraceutical Manufacturer	Subordinated Note (12% Cash, 4% PIK, Due 08/16)		8,193,079		8,043,716		8,043,716
		Class A Units (80,000 units)				800,000		983,000

				8,193,079		8,843,716		9,026,716
Dyson Corporation (2%)*	Custom Forging and Fastener Supplies	Class A Units (1,000,000 units)				1,000,000		5,048,000

						1,000,000		5,048,000
Equisales, LLC (1%)*	Energy Products and Services	Subordinated Note (13% Cash, 4% PIK, Due 04/12)		3,092,332		3,075,613		3,075,613
		Class A Units (500,000 units)				480,900		613,000

				3,092,332		3,556,513		3,688,613
Fischbein Partners, LLC (3%)*	Packaging and Materials Handling Equipment Manufacturer	Subordinated Note (12% Cash, 2% PIK, Due 10/16)		6,722,108		6,597,649		6,597,649
		Class A Units (1,750,000 units)				417,088		1,750,000

				6,722,108		7,014,737		8,347,649
Main Street Gourmet, LLC (2%)*	Baked Goods Provider	Subordinated Notes (12% Cash, 4.5% PIK, Due 10/16)		4,088,483		4,013,801		4,013,801
		Jr. Subordinated Notes (8% Cash, 2% PIK, Due 04/17)		1,009,802		991,130		991,130
		Preferred Units (233 units)				233,478		233,478
		Common Units (1,652 units)				16,522		16,522

				5,098,285		5,254,931		5,254,931
Plantation Products, LLC (5%)*	Seed Manufacturing	Subordinated Notes (13% Cash, 4.5% PIK, Due 06/16)		15,030,403		14,703,654		14,703,654
		Preferred Units (1,127 units)				1,127,000		1,127,000
		Common Units (92,000 units)				23,000		23,000

				15,030,403		15,853,654		15,853,654

QC Holdings, Inc. (0%)*	Lab Testing Services	Common Stock (5,594 shares)				563,602		525,000

						563,602		525,000

TRIANGLE CAPITAL CORPORATION

Unaudited Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
Technology Crops International (2%)*	Supply Chain Management Services	Subordinated Note (12% Cash, 5% PIK, Due 03/15)	$	5,539,269	$	5,468,388	$	5,468,388
		Common Units (50 Units)				500,000		478,000

				5,539,269		5,968,388		5,946,388
Venture Technology Groups, Inc. (2%)*	Fluid and Gas Handling Products Distributor	Subordinated Note (12.5% Cash, 4% PIK, Due 09/16)		5,389,333		5,281,833		5,281,833
		Class A Units (1,000,000 Units)				1,000,000		1,000,000

				5,389,333		6,281,833		6,281,833

Waste Recyclers Holdings, LLC (1%)*	Environmental and Facilities Services	Class A Preferred Units (280 Units)				2,251,100		—
		Class B Preferred Units (985,372 Units)				3,304,218		2,568,000
		Class C Preferred Units (1,444,475 Units)				1,499,531		1,689,000
		Common Unit Purchase Warrant (1,170,083 Units)				748,900		—
		Common Units (153,219 Units)				180,783		—

						7,984,532		4,257,000
Wythe Will Tzetzo, LLC (4%)*	Confectionary Goods Distributor	Subordinated Notes (12% Cash, 2% PIK, Due 10/16)		10,357,475		9,867,605		9,867,605
		Series A Preferred Units (74,764 units)				1,500,000		1,500,000
		Common Unit Purchase Warrants (25,065 units)				301,510		301,510

				10,357,475		11,669,115		11,669,115

Subtotal Affiliate Investments				82,682,933		98,595,888		101,105,447
*Control Investments:*
FCL Graphics, Inc. (“FCL”) and FCL Holding SPV, LLC (“SPV”) (1%)*	Commercial Printing Services	Senior Note — FCL (4.9% Cash, Due 9/16)		1,495,148		1,494,088		1,494,088
		Senior Note — FCL (7.9% Cash, 2% PIK, Due 9/16)		1,142,053		1,139,218		944,914
		Senior Note — SPV (2.4% Cash, 6% PIK, Due 9/16)		936,170		936,170		—
		Common Shares (960 shares)				—		—
		Members Interests — SPV (239,900 Units)				—		—

				3,573,371		3,569,476		2,439,002
Fire Sprinkler Systems, Inc. (0%)*	Specialty Trade Contractors	Subordinated Notes (2% PIK, Due 04/12)		3,264,573		2,780,028		443,000
		Common Stock (2,978 shares)				294,624		—

				3,264,573		3,074,652		443,000
Fischbein, LLC (1%)*	Packaging and Materials Handling Equipment Manufacturer	Class A-1 Common Units (501,984 units)				59,315		283,816
		Class A Common Units (3,839,068 units)				453,630		1,859,433

						512,945		2,143,249
Gerli & Company (1%)*	Specialty Woven Fabrics Manufacturer	Subordinated Note (8.5% Cash, Due 03/15)		3,130,301		3,000,000		2,262,000
		Class A Preferred Shares (1,211 shares)				855,000		—
		Class C Preferred Shares (744 shares)				—		—
		Class E Preferred Shares (400 shares)				161,440		—
		Common Stock (300 shares)				100,000		—

				3,130,301		4,116,440		2,262,000

Subtotal Control Investments				9,968,245		11,273,513		7,287,251

Total Investments, September 30, 2011(140%)*			$	431,094,066	$	457,381,509	$	464,380,316

*	Value as a percent of net assets

(1)	All debt investments are income producing. Common stock, preferred stock and all warrants are non–income producing.

(2)	Disclosures of interest rates on notes include cash interest rates and payment–in–kind (“PIK”) interest rates.

(3)	All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors.

(4)	Pine Street Holdings, LLC is the majority owner of Brantley Transportation, LLC and its sole business purpose is its ownership of Brantley Transportation, LLC.

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2010


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
*Non–Control / Non–Affiliate Investments:*
Ambient Air Corporation (“AA”) and Peaden-Hobbs Mechanical, LLC (“PHM”) (3%)*	Specialty Trade Contractors	Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)	$	4,325,151	$	4,287,109	$	4,287,109
		Common Stock-PHM (128,571 shares)				128,571		68,500
		Common Stock Warrants-AA (455 shares)				142,361		852,000

				4,325,151		4,558,041		5,207,609
Ann’s House of Nuts, Inc. (5%)*	Trail Mixes and Nut Producers	Subordinated Note (12% Cash, 1% PIK, Due 11/17)		7,009,722		6,603,828		6,603,828
		Preferred A Units (22,368 units)				2,124,957		2,124,957
		Preferred B Units (10,380 units)				986,059		986,059
		Common Units (190,935 units)				150,000		150,000
		Common Stock Warrants (14,558 shares)				14,558		14,558

				7,009,722		9,879,402		9,879,402
Assurance Operations Corporation (0%)*	Metal Fabrication	Common Stock (517 Shares)				516,867		528,900

						516,867		528,900
Botanical Laboratories, Inc. (5%)*	Nutritional Supplement Manufacturing and Distribution	Senior Notes (14% Cash, Due 02/15)		10,500,000		9,843,861		9,843,861
	Nutritional Supplement Manufacturing and Distribution	Common Unit Warrants (998,680)				474,600		—

				10,500,000		10,318,461		9,843,861
Capital Contractors, Inc. (5%)*	Janitorial and Facilities Maintenance Services	Subordinated Notes (12% Cash, 2% PIK, Due 12/15)		9,001,001		8,329,001		8,329,001
	Janitorial and Facilities Maintenance Services	Common Stock Warrants (20 shares)				492,000		492,000

				9,001,001		8,821,001		8,821,001
Carolina Beverage Group, LLC (8%)*	Beverage Manufacturing and Packaging	Subordinated Note (12% Cash, 4% PIK, Due 02/16)		12,865,233		12,622,521		12,622,521
		Class A Units (11,974 Units)				1,077,615		1,077,615
		Class B Units (11,974 Units)				119,735		119,735

				12,865,233		13,819,871		13,819,871
CRS Reprocessing, LLC (8%)*	Fluid Reprocessing Services	Subordinated Note (12% Cash, 2% PIK, Due 11/15)		11,129,470		10,706,406		10,706,406
		Subordinated Note (10% Cash, 4% PIK, Due 11/15)		3,403,211		3,052,570		3,052,570
		Common Unit Warrant (340 Units)				564,454		1,043,000

				14,532,681		14,323,430		14,801,976
CV Holdings, LLC (6%)*	Specialty Healthcare Products Manufacturer	Subordinated Note (12% Cash, 4% PIK, Due 09/13)		11,685,326		11,042,011		11,042,011
		Royalty rights				874,400		622,500

				11,685,326		11,916,411		11,664,511
Electronic Systems Protection, Inc. (2%)*	Power Protection Systems Manufacturing	Subordinated Note (12% Cash, 2% PIK, Due 12/15)		3,183,802		3,162,604		3,162,604
		Senior Note (8.3% Cash, Due 01/14)		835,261		835,261		835,261
		Common Stock (570 shares)				285,000		110,000

				4,019,063		4,282,865		4,107,865

Energy Hardware Holdings, LLC (0%)*	Machined Parts Distribution	Voting Units (4,833 units)				4,833		414,100

						4,833		414,100
Frozen Specialties, Inc. (4%)*	Frozen Foods Manufacturer	Subordinated Note (13% Cash, 5% PIK, Due 07/14)		8,060,481		7,945,904		7,945,904

				8,060,481		7,945,904		7,945,904
Garden Fresh Restaurant Corp. (0%)*	Restaurant	Membership Units (5,000 units)				500,000		723,800

						500,000		723,800

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
Gerli & Company (1%)*	Specialty Woven Fabrics Manufacturer	Subordinated Note (0.69% PIK, Due 08/11)	$	3,799,359	$	3,161,442	$	2,156,500
		Subordinated Note (6.25% Cash, 11.75% PIK, Due 08/11)		137,233		120,000		120,000
		Royalty rights				—		112,100
		Common Stock Warrants (56,559 shares)				83,414		—

				3,936,592		3,364,856		2,388,600
Great Expressions Group Holdings, LLC (3%)*	Dental Practice Management	Subordinated Note (12% Cash, 4% PIK, Due 08/15)		4,561,311		4,498,589		4,498,589
		Class A Units (225 Units)				450,000		678,400

				4,561,311		4,948,589		5,176,989
Grindmaster-Cecilware Corp. (3%)*	Food Services Equipment Manufacturer	Subordinated Note (12% Cash, 4.5% PIK, Due 04/16)		5,995,035		5,900,500		5,900,500

				5,995,035		5,900,500		5,900,500
Hatch Chile Co., LLC (3%)*	Food Products Distributor	Senior Note (19% Cash, Due 07/15)		4,500,000		4,394,652		4,394,652
		Subordinated Note (14% Cash, Due 07/15)		1,000,000		837,779		837,779
		Unit Purchase Warrant (5,265 Units)				149,800		149,800

				5,500,000		5,382,231		5,382,231
Infrastructure Corporation of America, Inc. (6%)*	Roadway Maintenance, Repair and Engineering Services	Subordinated Note (12% Cash, 1% PIK, Due 10/15)		10,769,120		9,566,843		9,566,843
		Common Stock Purchase Warrant (199,526 shares)				980,000		980,000

				10,769,120		10,546,843		10,546,843
Inland Pipe Rehabilitation Holding Company LLC (10%)*	Cleaning and Repair Services	Subordinated Note (14% Cash, Due 01/14)		8,274,920		7,621,285		7,621,285
		Subordinated Note (18% Cash, Due 01/14)		3,905,108		3,861,073		3,861,073
		Subordinated Note (15% Cash, Due 01/14)		306,302		306,302		306,302
		Subordinated Note (15.3% Cash, Due 01/14)		3,500,000		3,465,000		3,465,000
		Membership Interest Purchase Warrant (3.0%)				853,500		2,982,600

				15,986,330		16,107,160		18,236,260
Library Systems & Services, LLC (3%)*	Municipal Business Services	Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)		5,250,000		5,104,255		5,104,255
		Common Stock Warrants (112 shares)				58,995		535,000

				5,250,000		5,163,250		5,639,255
McKenzie Sports Products, LLC (3%)*	Taxidermy Manufacturer	Subordinated Note (13% Cash, 1% PIK, Due 10/17)		6,010,667		5,893,359		5,893,359

				6,010,667		5,893,359		5,893,359
Media Temple, Inc. (7%)*	Web Hosting Services	Subordinated Note (12% Cash, 4% PIK, Due 04/15)		8,800,000		8,624,776		8,624,776
		Convertible Note (8% Cash, 4% PIK, Due 04/15)		3,200,000		2,668,581		2,668,581
		Common Stock Purchase Warrant (28,000 Shares)				536,000		536,000

				12,000,000		11,829,357		11,829,357
Minco Technology Labs, LLC (3%)*	Semiconductor Distribution	Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)		5,102,216		4,984,368		4,984,368
		Class A Units (5,000 Units)				500,000		296,800

				5,102,216		5,484,368		5,281,168

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
Novolyte Technologies, Inc. (5%)*	Specialty Manufacturing	Subordinated Note (12% Cash, 5.5% PIK, Due 04/15)	$	7,785,733	$	7,686,662	$	7,686,662
		Preferred Units (641 units)				640,818		664,600
		Common Units (24,522 units)				160,204		370,200

				7,785,733		8,487,684		8,721,462
SRC, Inc. (5%)*	Specialty Chemical Manufacturer	Subordinated Notes (12% Cash, 2% PIK, Due 09/14)		9,001,000		8,697,200		8,697,200
		Common Stock Purchase Warrants				123,800		123,800

				9,001,000		8,821,000		8,821,000
Syrgis Holdings, Inc. (2%)*	Specialty Chemical Manufacturer	Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14)		2,873,393		2,858,198		2,858,198
		Class C Units (2,114 units)				1,000,000		962,200

				2,873,393		3,858,198		3,820,398
TBG Anesthesia Management, LLC (6%)*	Physician Management Services	Senior Note (13.5% Cash, Due 11/14)		11,000,000		10,612,766		10,612,766
		Warrant (263 shares)				276,100		165,000

				11,000,000		10,888,866		10,777,766
Top Knobs USA, Inc. (6%)*	Hardware Designer and Distributor	Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)		9,910,331		9,713,331		9,713,331
		Common Stock (26,593 shares)				750,000		750,000

				9,910,331		10,463,331		10,463,331
TrustHouse Services Group, Inc. (3%)*	Food Management Services	Subordinated Note (12% Cash, 2% PIK, Due 09/15)		4,440,543		4,381,604		4,381,604
		Class A Units (1,495 units)				475,000		492,900
		Class B Units (79 units)				25,000		—

				4,440,543		4,881,604		4,874,504
Tulsa Inspection Resources, Inc. (3%)*	Pipeline Inspection Services	Subordinated Note (14%-17.5% Cash, Due 03/14)		5,810,588		5,490,797		5,490,797
		Common Unit(1 unit)				200,000		—
		Common Stock Warrants (8 shares)				321,000		—

				5,810,588		6,011,797		5,490,797
Twin-Star International, Inc. (3%)*	Consumer Home Furnishings Manufacturer	Subordinated Note (12% Cash, 1% PIK, Due 04/14)		4,500,000		4,462,290		4,462,290
		Senior Note (4.53%, Due 04/13)		1,088,962		1,088,962		1,088,962

				5,588,962		5,551,252		5,551,252
Wholesale Floors, Inc. (1%)*	Commercial Services	Subordinated Note (12.5%Cash, 1.5% PIK, Due 06/14)		3,739,639		3,387,525		2,632,100
		Membership Interest Purchase Warrant (4.0%)				132,800		—

				3,739,639		3,520,325		2,632,100
Yellowstone Landscape Group, Inc. (7%)*	Landscaping Services	Subordinated Note (12% Cash, 3% PIK, Due 04/14)		12,438,838		12,250,147		12,250,147

				12,438,838		12,250,147		12,250,147
Zoom Systems (4%)*	Retail Kiosk Operator	Subordinated Note (12.5% Cash, 1.5% PIK, Due 12/14)		8,125,222		7,956,025		7,956,025
		Royalty rights				—		—

				8,125,222		7,956,025		7,956,025

Subtotal Non–Control / Non–Affiliate Investments				237,824,178		244,197,828		245,392,144

*Affiliate Investments:*

American De-Rosa Lamparts, LLC and Hallmark Lighting (2%)*	Wholesale and Distribution	Subordinated Note (5% PIK, Due 10/13)		5,475,141		5,153,341		3,985,700
American De-Rosa Lamparts, LLC and Hallmark Lighting (2%)*		Membership Units (6,516 Units)				350,000		—

				5,475,141		5,503,341		3,985,700

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
AP Services, Inc. (4%)*	Fluid Sealing Supplies and Services	Subordinated Note (12% Cash, 2% PIK, Due 09/15)	$	5,834,877	$	5,723,194	$	5,723,194
		Class A Units (933 units)				933,333		933,333
		Class B Units (496 units)				—		—

				5,834,877		6,656,527		6,656,527
Asset Point, LLC (3%)*	Asset Management Software Provider	Senior Note (12% Cash, 5% PIK, Due 03/13)		5,756,261		5,703,925		5,384,500
		Senior Note (12% Cash, 2% PIK, Due 07/15)		605,185		605,185		478,100
		Options to Purchase Membership Units (342,407 units)				500,000		—
		Membership Unit Warrants (356,506 units)				—		—

				6,361,446		6,809,110		5,862,600
Axxiom Manufacturing, Inc. (1%)*	Industrial Equipment Manufacturer	Common Stock (136,400 shares)				200,000		978,700
		Common Stock Warrant (4,000 shares)				—		28,700

						200,000		1,007,400
Brantley Transportation, LLC (“Brantley Transportation”) and Pine Street Holdings, LLC (“Pine Street”) (4) (2%)*	Oil and Gas Services	Subordinated Note —Brantley Transportation (14% Cash, Due 12/12)		3,800,000		3,738,821		3,546,600
		Common Unit Warrants —Brantley Transportation (4,560 common units)				33,600		—
		Preferred Units — Pine Street (200 units)				200,000		—
		Common Unit Warrants —Pine Street (2,220 units)				—		—

				3,800,000		3,972,421		3,546,600
Dyson Corporation (1%)*	Custom Forging and Fastener Supplies	Class A Units (1,000,000 units)				1,000,000		2,476,000

						1,000,000		2,476,000
Equisales, LLC (4%)*	Energy Products and Services	Subordinated Note (13% Cash, 4% PIK, Due 04/12)		6,000,000		5,959,983		5,959,983
		Class A Units (500,000 units)				480,900		569,300

				6,000,000		6,440,883		6,529,283
Plantation Products, LLC (8%)*	Seed Manufacturing	Subordinated Notes (13% Cash, 4.5% PIK, Due 06/16)		14,527,188		14,164,688		14,164,688
		Preferred Units (1,127 units)				1,127,000		1,127,000
		Common Units (92,000 units)				23,000		23,000

				14,527,188		15,314,688		15,314,688

QC Holdings, Inc.(0%)*	Lab Testing Services	Common Stock (5,594 shares)				563,602		505,500

						563,602		505,500
Technology Crops International (3%)*	Supply Chain Management Services	Subordinated Note (12% Cash, 5% PIK, Due 03/15)		5,333,595		5,250,980		5,250,980
		Common Units (50 Units)				500,000		612,200

				5,333,595		5,750,980		5,863,180
Waste Recyclers Holdings, LLC (2%)*	Environmental and Facilities Services	Class A Preferred Units (280 Units)				2,251,100		—
		Class B Preferred Units (985,372 Units)				3,304,218		2,384,100
		Class C Preferred Units (1,444,475 Units)				1,499,531		1,530,300
		Common Unit Purchase Warrant (1,170,083 Units)				748,900		—
		Common Units (153,219 Units)				180,783		—

						7,984,532		3,914,400

Subtotal Affiliate Investments				47,332,247		60,196,084		55,661,878

TRIANGLE CAPITAL CORPORATION

Consolidated Schedule of Investments — (Continued)


Portfolio Company	Industry	Type of Investment(1)(2)	Principal Amount		Cost		Fair Value(3)
*Control Investments:*

FCL Graphics, Inc. (1%)*	Commercial Printing Services	Senior Note (3.76% Cash, 2% PIK, Due 9/11)	$	1,500,498	$	1,497,934	$	1,465,400
		Senior Note (7.79% Cash, 2% PIK, Due 9/11)		2,045,228		2,041,167		1,081,100
		2nd Lien Note (2.79% Cash, 8% PIK, Due 12/11)		3,470,254		2,996,287		—
		Preferred Shares (35,000 shares)				—		—
		Common Shares (4,000 shares)				—		—
		Members Interests (3,839 Units)				—		—

				7,015,980		6,535,388		2,546,500
Fire Sprinkler Systems, Inc. (0%)*	Specialty Trade Contractors	Subordinated Notes (2% PIK, Due 04/11)		3,065,981		2,626,072		750,000
		Common Stock (2,978 shares)				294,624		—

				3,065,981		2,920,696		750,000
Fischbein, LLC (11%)*	Packaging and Materials Handling Equipment Manufacturer	Subordinated Note (13% Cash, 5.5% PIK, Due 05/13)		4,345,573		4,268,333		4,268,333
	Packaging and Materials Handling Equipment Manufacturer	Class A-1 Common Units (558,140 units)				558,140		2,200,600
		Class A Common Units (4,200,000 units)				4,200,000		13,649,600

				4,345,573		9,026,473		20,118,533
Weave Textiles, LLC (1%)*	Specialty Woven Fabrics Manufacturer	Senior Note (12% PIK, Due 01/11)		310,238		310,238		310,238
		Membership Units (425 units)				855,000		1,211,300

				310,238		1,165,238		1,521,538

Subtotal Control Investments				14,737,772		19,647,795		24,936,571

Total Investments, December 31, 2010 (181%)*			$	299,894,197	$	324,041,707	$	325,990,593

*	Value as a percent of net assets

(1)	All debt investments are income producing. Common stock, preferred stock and all warrants are non–income producing.

(2)	Disclosures of interest rates on subordinated notes include cash interest rates and payment–in–kind (“PIK”) interest rates.

(3)	All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors.

(4)	Pine Street Holdings, LLC is the majority owner of Brantley Transportation, LLC and its sole business purpose is its ownership of Brantley Transportation, LLC.

See accompanying notes.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

1.	ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS

Organization

Triangle Capital Corporation and its wholly owned subsidiaries, including Triangle Mezzanine Fund LLLP (the “Fund”) and Triangle Mezzanine Fund II LP (“Fund II”) (collectively, the “Company”), operates as a Business Development Company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). The Fund and Fund II are specialty finance limited partnerships formed to make investments primarily in middle market companies located throughout the United States. On September 11, 2003, the Fund was licensed to operate as a Small Business Investment Company (“SBIC”) under the authority of the United States Small Business Administration (“SBA”). On May 26, 2010, Fund II obtained its license to operate as an SBIC. As SBICs, both the Fund and Fund II are subject to a variety of regulations concerning, among other things, the size and nature of the companies in which they may invest and the structure of those investments.

The Company currently operates as a closed–end, non–diversified investment company and has elected to be treated as a BDC under the 1940 Act. The Company is internally managed by its executive officers under the supervision of its Board of Directors. The Company does not pay management or advisory fees, but instead incurs the operating costs associated with employing executive management and investment and portfolio management professionals.

Basis of Presentation

The financial statements of the Company include the accounts of Triangle Capital Corporation and its wholly-owned subsidiaries, including the Fund and Fund II. Neither the Fund nor Fund II consolidates portfolio company investments. The effects of all intercompany transactions between the Company and its subsidiaries have been eliminated in consolidation.

The accompanying unaudited financial statements are presented in conformity with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of financial statements for the interim period, have been reflected in the unaudited consolidated financial statements. The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, the unaudited financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the period ended December 31, 2010. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

2.	INVESTMENTS

Summaries of the composition of the Company’s investment portfolio at cost and fair value, and as a percentage of total investments, are shown in the following tables:


	Cost		Percentage of Total Portfolio			Fair Value		Percentage of Total Portfolio
September 30, 2011:
Subordinated debt, Unitranche and 2^nd lien notes	$	410,309,208		90	%	$	406,643,599		88	%
Senior debt		6,918,262		1			6,723,958		1
Equity shares		31,789,559		7			35,708,249		8
Equity warrants		7,490,080		2			14,423,510		3
Royalty rights		874,400		—			881,000		—

	$	457,381,509		100	%	$	464,380,316		100	%

December 31, 2010:
Subordinated debt, Unitranche and 2^nd lien notes	$	279,433,775		86	%	$	270,994,677		83	%
Senior debt		8,631,760		3			7,639,159		3
Equity shares		29,115,890		9			38,719,699		12
Equity warrants		5,985,882		2			7,902,458		2
Royalty rights		874,400		—			734,600		—

	$	324,041,707		100	%	$	325,990,593		100	%

During the three months ended September 30, 2011, the Company made four new investments totaling approximately $36.9 million and four investments in existing portfolio companies totaling approximately $11.0 million. During the nine months ended September 30, 2011, the Company made fourteen new investments totaling approximately $123.6 million and investments in eleven existing portfolio companies totaling approximately $60.5 million.

During the three months ended September 30, 2010, the Company made three new investments totaling approximately $26.1 million and four investments in existing portfolio companies totaling approximately $3.9 million. During the nine months ended September 30, 2010, the Company made nine new investments totaling approximately $69.7 million and twelve investments in existing portfolio companies totaling approximately $18.5 million.

Valuation of Investments

The Company has established and documented processes and methodologies for determining the fair values of portfolio company investments on a recurring basis in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). Under ASC Topic 820, a financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of valuation hierarchy established by ASC Topic 820 are defined as follows:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

The Company’s investment portfolio is comprised of debt and equity instruments of privately held companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs are not available. Therefore, the Company values all of its investments at fair value, as determined in good faith by the Board of Directors, using Level 3 inputs, as further described below. Due to the inherent uncertainty in the valuation process, the Board of Directors’ estimate of fair value may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.

Debt and equity securities that are not publicly traded and for which a limited market does not exist are valued at fair value as determined in good faith by the Board of Directors. There is no single standard for determining fair value in good faith, as fair value depends upon circumstances of each individual case. In general, fair value is the amount that the Company might reasonably expect to receive upon the current sale of the security.

Management evaluates the investments in portfolio companies using the most recent portfolio company financial statements and forecasts. Management also consults with the portfolio company’s senior management to obtain further updates on the portfolio company’s performance, including information such as industry trends, new product development and other operational issues.

In making the good faith determination of the value of debt securities, the Company starts with the cost basis of the security, which includes the amortized original issue discount, and payment–in–kind (“PIK”) interest, if any. The Company also uses a risk rating system to estimate the probability of default on the debt securities and the probability of loss if there is a default. The risk rating system covers both qualitative and quantitative aspects of the business and the securities held. In valuing debt securities, management utilizes an “income approach” model that considers factors including, but not limited to, (i) the portfolio investment’s current risk rating, (ii) the portfolio company’s current trailing twelve months’ (“TTM”) results of operations as compared to the portfolio company’s TTM results of operations as of the date the investment was made and the portfolio company’s anticipated results for the next twelve months of operations, (iii) the portfolio company’s current leverage as compared to its leverage as of the date the investment was made, (iv) publicly available information regarding current pricing and credit metrics for similar proposed and executed investment transactions of private companies and, (v) when management believes a relevant comparison exists, current pricing and credit metrics for similar proposed and executed investment transactions of publicly traded debt.

In valuing equity securities of private companies, the Company considers valuation methodologies consistent with industry practice, including but not limited to (i) valuation using a valuation model based on original transaction multiples and the portfolio company’s recent financial performance, (ii) publicly available information regarding the valuation of the securities based on recent sales in comparable transactions of private companies and, (iii) when management believes there are comparable companies that are publicly traded, a review of these publicly traded companies and the market multiple of their equity securities.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

The following table presents the Company’s financial instruments carried at fair value as of September 30, 2011 and December 31, 2010, on the consolidated balance sheet by ASC Topic 820 valuation hierarchy, as previously described:


	Fair Value at September 30, 2011
	Level 1		Level 2		Level 3		Total
Portfolio company investments	$	—	$	—	$	464,380,316	$	464,380,316

	$	—	$	—	$	464,380,316	$	464,380,316


	Fair Value at December 31, 2010
	Level 1		Level 2		Level 3		Total
Portfolio company investments	$	—	$	—	$	325,990,593	$	325,990,593

	$	—	$	—	$	325,990,593	$	325,990,593

The following table reconciles the beginning and ending balances of our portfolio company investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2011 and 2010:


	Nine months ended September 30,
	2011			2010
Fair value of portfolio, beginning of period	$	325,990,593		$	201,317,970
New investments		184,144,674			88,215,263
Proceeds from sales of investments		(17,011,538	)		(5,416,123	)
Loan origination fees and discounts received		(3,689,444	)		(1,713,818	)
Principal repayments received		(46,423,040	)		(48,559,151	)
Payment in kind interest earned		7,336,358			4,476,251
Payment in kind interest payments received		(3,884,330	)		(3,226,488	)
Accretion of loan discounts		843,534			477,513
Accretion of deferred loan origination revenue		1,029,151			1,065,703
Realized gain on investments		10,994,439			1,899,034
Unrealized gain on investments		5,049,919			2,042,245

Fair value of portfolio, end of period	$	464,380,316		$	240,578,399

All realized and unrealized gains and losses are included in earnings (changes in net assets) and are reported on separate line items within the Company’s statements of operations. Pre-tax net unrealized gains on investments of $7.1 million and $10.6 million, respectively, during the three and nine months ended September 30, 2011 are related to portfolio company investments that were still held by the Company as of September 30, 2011. Pre-tax net unrealized gains on investments of $0.9 million and $1.5 million, respectively, during the three and nine months ended September 30, 2010 are related to portfolio company investments that were still held by the Company as of September 30, 2010.

Duff & Phelps, LLC (“Duff & Phelps”), an independent valuation firm, provides third party valuation consulting services to the Company which consist of certain limited procedures that the Company identified and requested Duff & Phelps to perform (hereinafter referred to as the “procedures”). We generally request Duff & Phelps to perform the procedures on each portfolio company at least once in every calendar year and for new portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In addition, we generally request Duff & Phelps to perform the procedures on a portfolio company when there has been a significant change in the fair value of the investment. In certain instances, we may determine that it is not cost-effective, and as a result is not in our stockholders’ best interest, to request Duff & Phelps to perform the

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

procedures on one or more portfolio companies. Such instances include, but are not limited to, situations where the fair value of our investment in the portfolio company is determined to be insignificant relative to our total investment portfolio.

The total number of investments and the percentage of our portfolio on which we asked Duff & Phelps to perform such procedures are summarized below by period:


For the quarter ended:	Total companies		Percent of total investments at fair value(1)
September 30, 2010		8		26	%
December 31, 2010		9		29	%
March 31, 2011		11		34	%
June 30, 2011		13		26	%
September 30, 2011		11		31	%

(1)	Exclusive of the fair value of new investments made during the quarter

Upon completion of the procedures, Duff & Phelps concluded that the fair value, as determined by the Board of Directors, of those investments subjected to the procedures appeared reasonable. Our Board of Directors is ultimately and solely responsible for determining the fair value of our investments in good faith.

Warrants

When originating a debt security, the Company will sometimes receive warrants or other equity–related securities from the borrower. The Company determines the cost basis of the warrants or other equity–related securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity–related securities received. Any resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the warrant or other equity instruments is treated as original issue discount and accreted into interest income over the life of the loan.

Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments

Realized gains or losses are recorded upon the sale or liquidation of investments and are calculated as the difference between the net proceeds from the sale or liquidation, if any, and the cost basis of the investment using the specific identification method. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.

Investment Classification

In accordance with the provisions of the 1940 Act, the Company classifies investments by level of control. As defined in the 1940 Act, “Control Investments” are investments in those companies that the Company is deemed to “Control.” “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of the Company, as defined in the 1940 Act, other than Control Investments. “Non–Control/Non–Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. Generally, under the 1940 Act, the Company is deemed to control a company in which it has invested if the Company owns more than 25.0% of the voting securities of such company or has greater than 50.0% representation on its board. The Company is deemed to be an affiliate of a company in which the Company has invested if it owns between 5.0% and 25.0% of the voting securities of such company.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

Investment Income

Interest income, adjusted for amortization of premium and accretion of original issue discount, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing interest income on that loan until all principal and interest has been brought current through payment or a restructuring such that the interest income is deemed to be collectible. The Company writes off any previously accrued and uncollected interest when it is determined that interest is no longer considered collectible. Dividend income is recorded on the ex–dividend date.

Fee Income

Loan origination, facility, commitment, consent and other advance fees received in connection with loan agreements are recorded as deferred income and recognized as investment income over the term of the loan. In the general course of its business, the Company receives certain fees from portfolio companies, which are non-recurring in nature. Such fees include loan prepayment penalties and loan waiver and amendment fees, and are recorded as investment income when received.

Payment-in-Kind Interest

The Company currently holds, and expects to hold in the future, some loans in its portfolio that contain a PIK interest provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan, rather than being paid to us in cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.

To maintain the Company’s status as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as Amended (the “Code”), this PIK interest, which is a non-cash source of income, must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash. Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or a restructuring such that the interest income is deemed to be collectible. The Company writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.

Concentration of Credit Risk

The Company generally invests in lower middle–market companies in a variety of industries. At both September 30, 2011 and December 31, 2010, there were no individual investments greater than 10% of the fair value of the Company’s portfolio. Income, consisting of interest, dividends, fees, other investment income, and realization of gains or losses on equity interests, can fluctuate dramatically upon repayment of an investment or sale of an equity interest and in any given year can be highly concentrated among several investees.

The Company’s investments carry a number of risks including, but not limited to: 1) investing in lower middle market companies which have limited operating histories and financial resources; 2) investing in senior subordinated debt which ranks equal to or lower than debt held by other investors; and 3) holding investments that are not publicly traded and are subject to legal and other restrictions on resale and other risks common to investing in below investment grade debt and equity instruments.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

3.	INCOME TAXES

Triangle Capital Corporation has elected for federal income tax purposes to be treated as a RIC under Subchapter M of the Code. As a RIC, so long as certain minimum distribution, source-of-income and asset diversification requirements are met, income taxes are generally required to be paid only on the portion of taxable income and gains that are not distributed (actually or constructively) and on certain built-in gains.

The Company has certain wholly owned taxable subsidiaries (the “Taxable Subsidiaries”) each of which holds one or more of the Company’s portfolio investments that are listed on the Consolidated Schedule of Investments. The Taxable Subsidiaries are consolidated for financial reporting purposes, such that the Company’s consolidated financial statements reflect the Company’s investments in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the Taxable Subsidiaries is to permit the Company to hold certain portfolio companies that are organized as limited liability companies (“LLCs”) (or other forms of pass–through entities) while satisfying the RIC tax requirement that at least 90% of the RIC’s gross revenue for income tax purposes must consist of qualifying investment income. Absent the Taxable Subsidiaries, a proportionate amount of any gross income of an LLC (or other pass–through entity) portfolio investment would flow through directly to the RIC. To the extent that such income did not consist of qualifying investment income, it could jeopardize the Company’s ability to qualify as a RIC and therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or other pass-through entities) are owned by the Taxable Subsidiaries, their income is taxed to the Taxable Subsidiaries and does not flow through to the RIC, thereby helping the Company preserve its RIC status and resultant tax advantages. The Taxable Subsidiaries are not consolidated for income tax purposes and may generate income tax expense as a result of their ownership of the portfolio companies. This income tax expense is reflected in the Company’s Statements of Operations.

For federal income tax purposes, the cost of investments owned at September 30, 2011 was approximately $459.2 million.

4.	LONG–TERM DEBT

The Company reported the following borrowings outstanding on its Consolidated Balance Sheet as of September 30, 2011 and December 31, 2010:


Issuance/Pooling Date	Maturity Date	Prioritized Return (Interest) Rate			September 30, 2011		December 31, 2010
SBA Debentures:
September 28, 2005	September 1, 2015		5.796	%	$	—	$	9,500,000
March 28, 2007	March 1, 2017		6.231	%		4,000,000		4,000,000
March 26, 2008	March 1, 2018		6.214	%		6,410,000		6,410,000
September 24, 2008	September 1, 2018		6.455	%		50,900,000		50,900,000
March 25, 2009	March 1, 2019		5.337	%		22,000,000		22,000,000
March 24, 2010	March 1, 2020		4.825	%		6,800,000		6,800,000
September 22, 2010	September 1, 2020		3.687	%		32,590,000		32,590,000
March 29, 2011	March 1, 2021		4.474	%		75,400,000		63,400,000
September 21, 2011	September 1, 2021		3.392	%		19,100,000		—
SBA LMI Debentures:
September 14, 2010	March 1, 2016		2.508	%		6,993,394		6,864,866
Credit Facility:
May 9, 2011	May 8, 2014		—			—		—

					$	224,193,394	$	202,464,866

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

SBA and SBA LMI Debentures

Interest payments on SBA debentures are payable semi–annually. There are no principal payments required on these issues prior to maturity. Debentures issued prior to September 2006 were subject to prepayment penalties during their first five years. Those pre-payment penalties no longer apply to debentures issued after September 1, 2006. The Company’s SBA Low or Moderate Income (“LMI”) debentures are five-year deferred interest debentures that are issued at a discount to par. The accretion of discount on SBA LMI debentures is classified as interest expense in the Company’s consolidated financial statements.

Under the Small Business Investment Act and current SBA policy applicable to SBICs, an SBIC (or group of SBICs under common control) can have outstanding at any time, SBA-guaranteed debentures up to two times (and in certain cases, up to three times) the amount of its regulatory capital. As of September 30, 2011, the maximum statutory limit on the dollar amount of outstanding SBA-guaranteed debentures that can be issued by a single SBIC is $150.0 million and by a group of SBICs under common control is $225.0 million. As of September 30, 2011, the Fund has issued the maximum $150.0 million of SBA-guaranteed debentures and Fund II has issued the maximum $75.0 million in face amount of SBA-guaranteed debentures. In addition to a one–time 1.0% fee on the total commitment from the SBA, the Company also pays a one–time 2.425% fee on the amount of each SBA debenture issued and a one-time 2.0% fee on the amount of each SBA LMI debenture issued. These fees are capitalized as deferred financing costs and are amortized over the term of the debt agreements using the effective interest method. The weighted average interest rates for all SBA-guaranteed debentures as of September 30, 2011 and December 31, 2010 were 4.83% and 3.95%, respectively. As of September 30, 2011, all SBA debentures have been pooled. The weighted average interest rate as of December 31, 2010 included $139.1 million of pooled SBA-guaranteed debentures with a weighted average fixed interest rate of 5.29% and $63.4 million of unpooled SBA-guaranteed debentures with a weighted average interim interest rate of 1.00%.

Credit Facility

In May 2011, the Company entered into a three-year senior secured credit facility with an initial commitment of $50.0 million (the “Credit Facility”). The purpose of the Credit Facility is to provide additional liquidity in support of future investment and operational activities. The Credit Facility was arranged by BB&T Capital Markets and Fifth Third Bank and has an accordion feature which allows for an increase in the total loan size up to $90.0 million and also contains two one-year extension options, bringing the total potential commitment and funding period to five years from closing. The Credit Facility, which is structured to operate like a revolving credit facility, is secured primarily by Triangle Capital Corporation’s assets, excluding the assets of the Fund and Fund II.

Borrowings under the Credit Facility bear interest, subject to the Company’s election, on a per annum basis equal to (i) the applicable base rate plus 1.95% or ii) the applicable LIBOR rate plus 2.95%. The applicable base rate is equal to the greater of i) prime rate, ii) the federal funds rate plus 0.5% or iii) the adjusted one-month LIBOR plus 2.0%. The Company pays unused commitment fees of 0.375% per annum. As of September 30, 2011, the Company did not have any borrowings outstanding under the Credit Facility.

The Credit Facility contains certain affirmative and negative covenants, including but not limited to i) maintaining a minimum interest coverage ratio, ii) maintaining a minimum liquidity ratio, and iii) maintaining minimum consolidated tangible net worth. As of September 30, 2011, the Company was in compliance with all financial covenants of the Credit Facility.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

5.	EQUITY-BASED COMPENSATION

The Company’s Board of Directors and stockholders have approved the Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan (the “Plan”), under which there are 900,000 shares of the Company’s common stock authorized for issuance. Under the Plan, the Board of Directors (or Compensation Committee, if delegated administrative authority by the Board of Directors) may award stock options, restricted stock or other stock-based incentive awards to executive officers, employees and directors. Equity-based awards granted under the Plan to independent directors generally will vest over a one-year period and equity-based awards granted under the Plan to executive officers and employees generally will vest ratably over a four-year period.

The Company accounts for its equity-based compensation plan using the fair value method, as prescribed by ASC Topic 718, Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize this fair value to compensation expense over the requisite service period or vesting term.

The following table presents information with respect to the Plan for the nine months ended September 30, 2011 and 2010:


	Nine months ended September 30, 2011					Nine months ended September 30, 2010
	Number of Shares			Weighted-Average Grant-Date Fair Value per Share		Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Unvested shares, beginning of period		302,698		$	11.40		219,813		$	10.76
Shares granted during the period		161,174		$	20.37		152,944		$	12.01
Shares vested during the period		(104,317	)	$	11.53		(70,059	)	$	10.72

Unvested shares, end of period		359,555		$	15.39		302,698		$	11.40

In the three and nine months ended September 30, 2011, the Company recognized equity-based compensation expense of approximately $0.5 million and $1.4 million, respectively. In the three and nine months ended September 30, 2010, the Company recognized equity-based compensation expense of approximately $0.3 million and $0.8 million, respectively. This expense is included in general and administrative expenses in the Company’s consolidated statements of operations.

As of September 30, 2011, there was approximately $4.3 million of total unrecognized compensation cost, related to the Company’s non-vested restricted shares. This cost is expected to be recognized over a weighted-average period of approximately two years.

TRIANGLE CAPITAL CORPORATION

Notes to Unaudited Consolidated Financial Statements — (Continued)

6.	FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the nine months ended September 30, 2011 and 2010:


	Nine months ended September 30,
	2011			2010
Per share data:
Net asset value at beginning of period	$	12.09		$	11.03
Net investment income(1)		1.53			1.16
Net realized gain (loss) on investments(1)		0.59			0.16
Net unrealized appreciation (depreciation) on investments(1)		0.27			0.20

Total increase from investment operations(1)		2.39			1.52
Cash dividends/distributions declared		(1.30	)		(1.23	)
Shares issued pursuant to Dividend Reinvestment Plan		0.02			0.05
Common stock offerings		1.61			0.67
Stock-based compensation		(0.06	)		(0.07	)
Income tax provision(1)		—			(0.01	)
Other(2)		(0.16	)		0.03

Net asset value at end of period	$	14.59		$	11.99

Market value at end of period(3)	$	15.22		$	15.98

Shares outstanding at end of period		22,714,851			14,885,134
Net assets at end of period	$	331,444,475		$	178,428,821
Average net assets	$	248,142,989		$	133,569,376
Ratio of total expenses to average net assets (annualized)		9	%		12	%
Ratio of net investment income to average net assets (annualized)		15	%		14	%
Portfolio turnover ratio		12	%		25	%
Total Return(4)		(13	%)		42	%

(1)	Weighted average basic per share data.

(2)

Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

(3)	Represents the closing price of the Company’s common stock on the last day of the period.

(4)	Total return equals the change in the ending market value of the Company’s common stock during the period, plus dividends declared per share during the period, divided by the market value of the Company’s common stock on the first day of the period. Total return is not annualized.

7.	SUBSEQUENT EVENTS

In October 2011, the Company invested $9.7 million in subordinated debt and equity of Media Storm, LLC (“Media Storm”). Media Storm plans and executes advertising purchases on behalf of television networks. Under the terms of the investment, Media Storm will pay interest on the subordinated debt at a rate of 14% per annum.

On November 1, 2011, the Company entered into a supplement and joinder agreement (the “Agreement”) to the Credit Facility. The Agreement increased the commitment under the Credit Facility from $50.0 million to $75.0 million.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements, including a brief discussion of our business, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the Unaudited Financial Statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2010. Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.

Forward-Looking Statements

Some of the statements in this Quarterly Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Words such as “expect,” “anticipate,” “target,” “goals,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “forecast,” “may,” “should,” “potential,” variations of such words, and similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Readers are cautioned that the forward-looking statements contained in this Quarterly Report are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors discussed herein and in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2010. Other factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in our operations or the economy generally due to terrorism, and future changes in laws or regulations and conditions in our operating areas. These statements are based on our current expectations, estimates, forecasts, information and projections about the industry in which we operate and the beliefs and assumptions of our management as of the date of this Quarterly Report. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview of Our Business

We are a Maryland corporation which has elected to be treated and operates as an internally managed business development company, or BDC, under the Investment Company Act of 1940, or 1940 Act. Our wholly owned subsidiaries, Triangle Mezzanine Fund LLLP, or the Fund, and Triangle Mezzanine Fund II LP, or Fund II, are licensed as small business investment companies, or SBICs, by the United States Small Business Administration, or SBA. In addition, the Fund has also elected to be treated as a BDC under the 1940 Act. We, the Fund and Fund II invest primarily in debt instruments, equity investments, warrants and other securities of lower middle market privately held companies located in the United States.

Our business is to provide capital to lower middle market companies in the United States. We define lower middle market companies as those with annual revenues between $10.0 and $100.0 million. We focus on investments in companies with a history of generating revenues and positive cash flows, an established market position and a proven management team with a strong operating discipline. Our target portfolio company has annual revenues between $20.0 and $100.0 million and annual earnings before interest, taxes, depreciation and amortization, or EBITDA, between $3.0 and $20.0 million.

We invest primarily in subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. On a more limited basis, we also invest in senior debt securities secured by first lien security interests in portfolio companies. Our investments generally range from $5.0 to $15.0 million per portfolio company. In certain situations, we partner with other funds to provide larger financing commitments.

We generate revenues in the form of interest income, primarily from our investments in debt securities, loan origination and other fees and dividend income. Fees generated in connection with our debt investments are recognized over the life of the loan using the effective interest method or, in some cases, recognized as earned. In addition, we generate revenue in the form of capital gains, if any, on warrants or other equity-related securities that we acquire from our portfolio companies. Our debt investments generally have a term of between three and seven years and typically bear interest at fixed rates between 12.0% and 17.0% per annum. Certain of our debt investments have a form of interest, referred to as payment-in-kind, or PIK, interest, that is not paid currently but is instead accrued and added to the loan balance and paid at the end of the term. In our negotiations with potential portfolio companies, we generally seek to minimize PIK interest. Cash interest on our debt investments is generally payable monthly; however, some of our debt investments pay cash interest on a quarterly basis. As of both September 30, 2011, and December 31, 2010, the weighted average yield on our outstanding debt investments other than non-accrual debt investments (including PIK interest) was approximately 15.1%. The weighted average yield on all of our outstanding investments (including equity and equity-linked investments but excluding non-accrual debt investments) was approximately 14.0% and 13.7% as of September 30, 2011 and December 31, 2010, respectively. The weighted average yield on all of our outstanding investments (including equity and equity-linked investments and non-accrual debt investments) was approximately 13.6% and 12.9% as of September 30, 2011 and December 31, 2010, respectively.

The Fund and Fund II are eligible to issue debentures to the SBA, which pools these with debentures of other SBICs and sells them in the capital markets at favorable interest rates, in part as a result of the guarantee of payment from the SBA. We invest these funds in portfolio companies. We intend to continue to operate the Fund and Fund II as SBICs, subject to SBA approval, and to utilize the proceeds of the sale of SBA-guaranteed debentures, referred to herein as SBA leverage, to enhance returns to our stockholders.

Portfolio Composition

The total value of our investment portfolio was $464.4 million as of September 30, 2011, as compared to $326.0 million as of December 31, 2010. As of September 30, 2011, we had investments in 60 portfolio companies with an aggregate cost of $457.4 million. As of December 31, 2010, we had investments in 48 portfolio companies with an aggregate cost of $324.0 million. As of both September 30, 2011 and December 31, 2010, none of our portfolio investments represented greater than 10% of the total fair value of our investment portfolio.

As of September 30, 2011 and December 31, 2010, our investment portfolio consisted of the following investments:


	Cost		Percentage of Total Portfolio			Fair Value		Percentage of Total Portfolio
September 30, 2011:
Subordinated debt, Unitranche and 2^ndlien notes	$	410,309,208		90	%	$	406,643,599		88	%
Senior debt		6,918,262		1			6,723,958		1
Equity shares		31,789,559		7			35,708,249		8
Equity warrants		7,490,080		2			14,423,510		3
Royalty rights		874,400		—			881,000		—

	$	457,381,509		100	%	$	464,380,316		100	%

December 31, 2010:
Subordinated debt, Unitranche and 2^nd lien notes	$	279,433,775		86	%	$	270,994,677		83	%
Senior debt		8,631,760		3

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents