Exhibit 99.1 Gladstone Capital Reports Fiscal Year End Results for September 30, 2003: Net Increase in Stockholders' Equity Resulting From Operations Was $1.09 Per Diluted Common Share, a 45% Increase From the Previous Year End MCLEAN, Va., Dec. 11 /PRNewswire-FirstCall/ -- Gladstone Capital Corp. (Nasdaq: GLAD) (the "Company") announced today that the Net Increase in Stockholders' Equity Resulting from Operations increased 45% from the previous fiscal year ended September 30, 2002 from $7,616,601 million or $0.75 per diluted common share to $11,073,581 million or $1.09 per diluted common share for the fiscal year ended September 30, 2003. Total assets were $214,566,663 million at September 30, 2003 compared to $172,922,039 million at September 2002, an increase of 24%. Net Increase in Stockholders' Equity Resulting from Operations for the three months ended September 30, 2003 was $2,628,513 million or $0.26 per diluted common share compared to $2,786,565 million or $0.27 per diluted common share for the three months ended September 30, 2002. This 6% decrease is due to a number of items. First, there was a valuation adjustment to our portfolio by our evaluation service, Standard and Poor's Loan Evaluations Service; second a little over $200,000 was paid to the employees as a year-end bonus and third, several of our loans have paid down or paid off early and were not replaced during the quarter. The number of new loans put on the books for the fiscal year ended September 30, 2003 was lower than we had expected due to the cautious approach we had taken in 2003. With $109 million in loans outstanding at the year end, we focus on the New Year and the opportunities we see ahead as the economy begins to show more loan opportunities. The recession that lasted for more than three years is finally over. We believe the year ahead will be very strong. The businesses that are requesting financing from us have much more believable financial projections and we are seeing a greater volume approach us. We forecast 2004 as the "turn around" year that we have been awaiting. Our goal as always is to increase our loan portfolio and our dividends to shareholders. The attached financial statements are without footnotes. We have filed a Form 10-K for the fiscal year ended September 30, 2003 with the Securities and Exchange Commission (the "SEC") and that form can be retrieved from the SEC website at www.SEC.gov or from the Company's web site at www.GladstoneCapital.com. A paper copy can be obtained by writing to us at 1616 Anderson Road, McLean, VA 22102. For further information contact Skye Breeden at 703-286-0775. The company will have a conference call Friday, December 12, 2003 at 10:30 am EST to answer questions. Please call 1-877-679-9055 and use the ID# 347607 and you will be placed on hold until the conference starts. An operator will monitor the call and set a queue for the questions. The conference call will be recorded and available for replay until January 12, 2003 by calling 1-800-615-3210. This press release may include statements that may 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, including statements with regard to the future performance of the Company. Words such as "believes," "expects," "projects" and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward- looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's Form 10-K for the Fiscal Year Ended September 30, 2002, as filed with the Securities and Exchange Commission on December 11, 2002. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. GLADSTONE CAPITAL CORPORATION CONSOLIDATED BALANCE SHEETS September 30, September 30, 2003 2002 ASSETS Investments at fair value (Cost 9/30/2003: $109,529,893; 9/30/2002: $79,718,354) $109,307,553 $79,718,354 Cash and cash equivalents 21,143,972 51,930,529 Cash and cash equivalents pledged as collateral 80,022,249 39,998,799 Interest receivable - investments in debt securities 1,041,943 685,274 Interest receivable - cash and cash equivalents 955 4,389 Interest receivable - officers 108,657 109,874 Due from custodian 1,207,000 Prepaid assets 1,479,815 357,955 Other assets 254,519 116,865 TOTAL ASSETS $214,566,663 $172,922,039 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Accounts payable $23,247 $- Dividends payable 3,327,009 2,115,087 Accrued expenses and deferred liabilities 1,965,025 944,960 Repurchase agreement 78,449,000 39,198,719 Total Liabilities $83,764,281 $42,258,766 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 50,000,000 shares authorized and 10,081,844 and 10,071,844 shares issued and outstanding, respectively $10,082 $10,072 Capital in excess of par value 140,416,674 140,266,684 Notes receivable - officers (8,985,940) (8,983,796) Net unrealized depreciation on investments (222,340) - Undistributed/(overdistributed) net investment income (416,094) (629,687) Total Stockholders' Equity $130,802,382 $130,663,273 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $214,566,663 $172,922,039 GLADSTONE CAPITAL CORPORATION SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2003 (UNAUDITED) COMPANY(1) INDUSTRY INVESTMENT COST FAIR VALUE America's Water heater Senior Term Debt Water Heater rentals and (2)(4) $12,000,000 $12,000,000 Rentals, LLC servicing ARI Holdings, Manufacturing Senior Term Inc. auto parts Debt(2)(3) 3,511,667 3,511,667 Senior Term Debt(2) 1,500,000 1,500,000 Coyne Industrial Senior Term International services Debt(2)(3)(4) 15,421,740 15,306,077 Enterprises Corp. Finn Manufacturing Senior Corporation landscape Subordinated equipment Term Debt(4) 10,500,000 10,421,250 Common Stock Warrants for 2% Ownership 37,000 431,111 Fugate & Imaging Senior Term Associates, supplies Debt(4) 3,412,500 3,412,500 Inc. Senior Term Debt(4) 1,833,333 1,833,333 Home Care Medical Senior Term Supply, Inc. equipment Debt(2)(4)(5) 18,000,000 18,428,400 rental Inca Metal Material Senior Term Products handling and Debt(2)(4) 5,775,000 4,995,375 Corp. storage Kingway products Acquisition, Inc. Clymer Acquisitions, Inc. Kozy Shack Food Senior Term Enterprises, production Debt(2)(4) 900,000 909,000 Inc. and sales Marcal Paper Manufacturing Senior Mills, Inc. paper Subordinated products Term Debt(2)(4) 6,975,000 6,922,687 First Mortgage Debt (3) 9,163,653 9,163,653 Mistras Nondestructive Senior Term Holdings, testing Debt(2) 10,000,000 10,000,000 Inc. instruments, Senior Term systems and Debt(2) 5,000,000 5,000,000 services Wingstop Restaurant - Senior Term Restaurants fast food Debt(4) 3,500,000 3,482,500 International, Senior Term Inc. Debt(4) 2,000,000 1,990,000 $109,529,893 $109,307,553 (1) We do not "Control," and are not an "Affiliate" of, any of our portfolio companies, each as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). In general, under the 1940 Act, we would "Control" a portfolio company if we owned 25% or more of its voting securities and would be an "Affiliate" of a portfolio company if we owned 5% or more of its voting securities. (2) Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt. (3) Has some paid in kind (PIK) interest. Refer to Note 2 "Summary of Significant Accounting Policies" of Form 10-K for the fiscal year ended September 30, 2003. (4) Fair value was based on valuation prepared and provided by Standard & Poor's Loan Evaluation Services. (5) Includes a success fee with a fair value of $473,400. GLADSTONE CAPITAL CORPORATION SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2002 COMPANY (1) INDUSTRY INVESTMENT COST FAIR VALUE ARI Holdings, Manufacturing Junior Inc. auto parts Subordinated Term Debt(3) $ 8,250,803 $ 8,250,803 Coyne Industrial Senior Term International services Debt(2)(3) Enterprises Corp. 16,054,268 16,054,268 Finn Manufacturing Senior Corporation landscape Subordinated equipment Term Debt 10,500,000 10,500,000 Common Stock Warrants for 2% Ownership 37,000 37,000 Home Care Medical Senior Term Supply, Inc. equipment Debt(2) rental 18,000,000 18,000,000 Inca Metal Material Senior Term Products Corp. handling and Debt(2) storage products 6,000,000 6,000,000 Kozy Shack Food production Senior Term Enterprises, and sales Debt(2) Inc. 4,300,000 4,300,000 Marcal Paper Manufacturing Senior Mills, Inc. paper products Subordinated Term Debt(2) 7,500,000 7,500,000 First Mortgage Debt(3) 9,076,283 9,076,283 $79,718,354 $79,718,354 (1) We do not "Control," and are not an "Affiliate" of, any of our portfolio companies, each as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). In general, under the 1940 Act, we would "Control" a portfolio company if we owned 25% or more of its voting securities and would be an "Affiliate" of a portfolio company if we owned 5% or more of its voting securities. (2) Last Out Tranche of senior debt, meaning if the company is liquidated then the holder of the Last Out Tranche is paid after the senior debt. (3) Has some paid in kind (PIK) interest. Refer to Note 2 "Summary of Significant Accounting Policies" of Form 10-K for the fiscal year ended September 30, 2002. GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS Fiscal Year Fiscal Year Ended Ended September 30, September 30, 2003 2002 INVESTMENT INCOME Interest income - investments $13,248,415 $6,641,144 Interest income - cash and cash equivalents 466,316 1,576,304 Interest income - notes receivable from officers 437,737 433,391 Managerial assistance fees 885,500 1,673,614 Other income 116,906 131,250 Total Investment Income $15,154,874 $10,455,703 EXPENSES Salaries and benefits $2,018,004 $1,367,180 Rent 209,864 125,128 Professional fees 409,826 549,781 Directors fees 73,647 22,000 Insurance 275,511 206,385 Stockholder related costs 143,273 104,167 Financing fees 222,038 - General and administrative 506,790 464,461 Total Expenses $3,858,953 $2,839,102 NET INVESTMENT INCOME $11,295,921 $7,616,601 Net unrealized appreciation on investments (222,340) - NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS $11,073,581 $7,616,601 NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS PER COMMON SHARE Basic $1.10 $0.76 Diluted $1.09 $0.75 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic 10,072,677 10,064,900 Diluted 10,188,488 10,166,752 GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three Months Three Months Ended Ended September 30, September 30, 2003 2002 INVESTMENT INCOME Interest income - investments $3,360,506 $2,905,683 Interest income - cash and cash equivalents 75,739 215,493 Interest income - notes receivable from officers 108,659 109,873 Managerial assistance fees 402,500 386,805 Other income 53,001 83,750 Total Investment Income $4,000,405 $3,701,604 EXPENSES Salaries and benefits $613,002 $398,585 Rent 45,820 41,753 Professional fees 107,348 214,977 Directors fees 19,000 8,000 Insurance 58,787 58,919 Stockholder related costs 19,614 25,695 Financing fees 159,683 - General and administrative 128,711 167,110 Total Expenses $1,151,965 $915,039 NET INVESTMENT INCOME $2,848,440 $2,786,565 Net unrealized depreciation on investments (219,927) - NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS $2,628,513 $2,786,565 NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS PER COMMON SHARE Basic $0.26 $0.28 Diluted $0.26 $0.27 WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic 10,072,677 10,071,844 Diluted 10,270,403 10,163,954 GLADSTONE CAPITAL CORPORATION FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Three Months Ended Ended September 30, September 30, 2003 2002 Per Share Data (1) Net asset value at beginning of period $13.04 $12.92 Net investment income 0.28 0.27 Net unrealized (loss)/gain on investments (0.02) - Distributions from net investment income (0.33) (0.21) Effect of anti-dilution - (0.01) Net asset value at end of period $12.97 $12.97 Per share market value at beginning of period $20.48 $18.05 Per share market value at end of period 19.45 16.88 Total return (2)(3) -3.42% -5.32% Shares outstanding at end of period 10,081,844 10,071,844 Ratios/Supplemental Data Net assets at end of period $130,802,382 $130,663,273 Average net assets $132,274,096 $131,338,959 Ratio of operating expenses to average net assets - annualized 3.48% 2.79% Ratio of net investment income to average net assets - annualized 8.00% 8.49% Fiscal Year Fiscal Year Ended Ended September 30, September 30, 2003 2002 Per Share Data (1) Net asset value at beginning of period $12.97 $13.05 Net investment income 1.12 0.76 Net unrealized loss on investments (0.02) - Issuance of common stock - (0.02) Distributions from net investment income (1.10) (0.76) Offering costs - (0.01) Distributions in excess of net investment income - (0.05) Net asset value at end of period $12.97 $12.97 Per share market value at beginning of period $16.88 $16.14 Per share market value at end of period 19.45 16.88 Total return (3) 21.74% 9.60% Shares outstanding at end of period 10,081,844 10,071,844 Ratios/Supplemental Data Net assets at end of period $130,802,382 $130,663,273 Average net assets $132,196,505 $130,984,674 Ratio of operating expenses to average net assets 2.92% 2.17% Ratio of net investment income to average net assets 8.38% 5.81% (1) Basic per share data. (2) Amounts were not annualized for the results of the three month periods ended September 30, 2003 and September 30, 2002. (3) Total return equals the increase of the ending market value over the beginning market value plus distributions divided by the beginning market value. SOURCE Gladstone Capital Corp. -0- 12/11/2003 /CONTACT: Skye Breeden of Gladstone Capital Corp., +1-703-286-0775/ /Web site: http://www.gladstonecapital.com/ (GLAD) CO: Gladstone Capital Corp. ST: Virginia IN: FIN RLT SU: ERN CCA