Exhibit 99.1 Gladstone Capital Corporation Reports Results for the Fourth Quarter and Fiscal Year Ended September 30, 2007 -- Net Investment Income for the quarter ended September 30, 2007 was $5.7 million, or $0.39 per common share -- Net Investment Income for the fiscal year ended September 30, 2007 was $22.3 million, or $1.69 per common share MCLEAN, Va.--(BUSINESS WIRE)--December 3, 2007--Gladstone Capital Corp. (NASDAQ:GLAD) (the "Company") today announced earnings for the quarter and fiscal year ended September 30, 2007. All share references are based on weighted average common shares outstanding, unless otherwise noted. For the fiscal year ended September 30, 2007, there were no options outstanding to dilute outstanding shares. Net Investment Income for the quarter ended September 30, 2007 increased 15.3% to $5,668,407, as compared to $4,916,268, for the quarter ended September 30, 2006. Net Investment Income for the quarter ended September 30, 2007 was $0.39 per share and $0.42 per share for the quarter ended September 30, 2006. Net Investment Income for the fiscal year ended September 30, 2007 increased 15% to $22,260,556, or $1.69 per share, as compared to $19,350,580, or $1.70 per basic share and $1.67 per diluted share for the fiscal year ended September 30, 2006. For the quarter ended September 30, 2007, Net Increase in Net Assets Resulting from Operations was $738,951, or $0.05 per share, as compared to $5,063,429, or $0.44 per basic share and $0.43 per diluted share, for the same period one year ago. Net Increase in Net Assets Resulting from Operations for the fiscal year ended September 30, 2007 decreased 46% to $14,952,004, or $1.13 per share, as compared to $24,430,235, or $2.15 per basic share and $2.10 per diluted share, for the fiscal year ended September 30, 2006. The primary difference between the current and prior year periods is the result of net unrealized depreciation and appreciation of the Company's investment portfolio. The Company recorded net unrealized depreciation of $4,888,519 and $7,354,434 for the quarter and fiscal year ended September 30, 2007, respectively, compared to net unrealized appreciation on its investments of $198,735 and $5,968,555 for the quarter and fiscal year ended September 30, 2006, respectively. Total assets were $367,729,138 at September 30, 2007, as compared to $225,783,215 at September 30, 2006. Net asset value was $220,958,735, or $14.97 per actual common share outstanding, at September 30, 2007 as compared to $172,570,487, or $14.02 per actual common share outstanding, at September 30, 2006. The annualized weighted average yield on the Company's portfolio was 11.0% and 12.0% for the quarter and fiscal year ended September 30, 2007, respectively, as compared to 13.2% and 12.7% for the quarter and fiscal year ended September 30, 2006, respectively. For the fiscal year ended September 30, 2007, the Company reported the following activity: -- Returned 11.3% on average equity outstanding for the year; -- Purchased a portfolio of media and communication loans for approximately $63.3 million; -- Funded approximately $198.4 million of new investments in addition to the media portfolio; -- Received principal repayments of $121.8 million, which included scheduled principal repayments; -- Received $2.2 million of success fees in connection with the full repayment of four investments; -- Received prepayment penalties of approximately $500,000; -- Converted a non-performing loan of approximately $900,000 into an equity investment for 100% ownership of the company; -- Issued 2,550,000 shares of common stock for aggregate net proceeds of approximately $56.8 million, all of which were used to repay outstanding borrowings on the Company's line of credit; -- Paid monthly cash dividends of $0.14 per common share for each month in fiscal year 2007, for an annual dividend of $1.68 per share; and -- Net Asset Value increased 6.8% from $14.02 to $14.97 per share. At September 30, 2007, the Company had investments in debt and equity securities and loans to syndicated loan participants in 56 private companies having an aggregate cost basis of approximately $355.8 million and a fair value of approximately $349.8 million. Subsequent to September 30, 2007, the Company: -- Funded approximately $56.2 million in additional new investment to existing and new portfolio companies; -- Declared monthly cash dividends of $0.14 per common share for each of the months of October, November, and December, 2007; and -- Completed a public offering in October 2007 of 2,500,000 shares of common stock at a public offering price of $18.70 per share for net proceeds of approximately $43.7 million, all of which were used to repay outstanding borrowings on the Company's line of credit. In connection with this offering, in November, the underwriter exercised its over-allotment option to purchase an additional 375,000 shares of common stock for additional net proceeds of approximately $6.6 million. "Although our fourth quarter was uneventful in terms of production, overall fiscal year 2007 produced double-digit growth, with a 15% increase in Net Investment Income. We are very pleased with our net new production of about $140 million. Our growth during fiscal year 2007 reflects the dedication and hard work of our entire team," said Chip Stelljes, President and Chief Investment Officer. "We are also very excited about the positive start in production for our 2008 fiscal year and are eager to continue to grow our portfolio in the upcoming year." The financial statements below are without footnotes. We have filed a Form 10-K today for the fiscal year ended September 30, 2007 with the Securities and Exchange Commission (the "SEC"), which can be retrieved from the SEC's website at www.SEC.gov or from the Company's web site at www.GladstoneCapital.com. A paper copy can be obtained free of charge by writing to us at 1521 Westbranch Drive, Suite 200, McLean, VA 22102. Gladstone Capital will host a conference call at 8:30 a.m. EST, December 4, 2007. Please call 877-407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions. The replay number will be available two hours after the call for approximately 30 days. To hear the replay, please dial 877-660-6853 and use Access Code 286 and ID code 262854. For further information contact Investor Relations at 703-287-5893. This press release may include statements that may constitute "forward-looking statements," including statements with regard to the future performance of the Company. Words such as "should," "believes," "feel," "expects," "projects," "strive," "goals," 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, 2007, as filed with the Securities and Exchange Commission on December 3, 2007. 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 STATEMENTS OF ASSETS & LIABILITIES (Unaudited) September 30, September 30, 2007 2006 ------------- ------------- ASSETS Non-Control/Non-Affiliate Investments (Cost 9/30/2007: $354,835,652; 9/30/2006: $216,202,986) $348,920,982 $217,642,750 Control investments (Cost 9/30/2007: $923,548) 923,548 - ------------- ------------- Total investments at fair value (Cost 9/30/07: $355,759,200; 9/30/06 $216,202,986) 349,844,530 217,642,750 Cash and cash equivalents 8,838,658 731,744 U.S. Treasury bill 2,484,464 - Interest receivable - investments in debt securities 2,425,555 1,394,942 Interest receivable - employees 21,417 37,396 Due from custodian 3,230,385 3,587,152 Deferred financing fees 186,270 145,691 Prepaid assets 337,106 226,747 Due from employees - 1,803,283 Other assets 360,753 213,510 ------------- ------------- TOTAL ASSETS $367,729,138 $225,783,215 ============= ============= LIABILITIES Accounts payable $ 6,013 $ 4,072 Interest payable 587,514 247,530 Administration fee due to Administrator 237,510 - Fees due to Adviser 708,517 240,363 Borrowings under lines of credit 144,440,000 49,993,000 Withholding taxes payable - 1,803,283 Accrued expenses and deferred liabilities 790,849 721,287 Funds held in escrow - 203,193 ------------- ------------- TOTAL LIABILITIES 146,770,403 53,212,728 ------------- ------------- NET ASSETS $220,958,735 $172,570,487 ============= ============= ANALYSIS OF NET ASSETS Common stock, $0.001 par value, 50,000,000 shares authorized and 14,762,574 and 12,305,008 shares issued and outstanding, respectively $ 14,763 $ 12,305 Capital in excess of par value 235,906,665 181,572,776 Notes receivable - employees (9,230,502) (10,248,308) Net unrealized (depreciation) appreciation on investments (5,914,670) 1,439,764 Unrealized depreciation on derivative (291,686) (253,716) Accumulated undistributed net investment income 474,165 47,666 ------------- ------------- TOTAL NET ASSETS $220,958,735 $172,570,487 ============= ============= NET ASSETS PER SHARE $ 14.97 $ 14.02 ============= ============= GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, 2007 2006 ------------- ------------- INVESTMENT INCOME Interest income - investments $ 10,348,191 $ 7,148,853 Interest income - cash and cash equivalents 77,306 16,667 Interest income - notes receivable from employees 122,247 118,338 Prepayment fees and other income 60,000 62,153 ------------- ------------- Total investment income 10,607,744 7,346,011 ------------- ------------- EXPENSES Interest expense 2,532,103 935,922 Loan servicing 1,246,981 763,851 Base Management fee 595,974 328,520 Incentive fee 1,133,681 - Administration fee 237,510 - Professional fees 154,360 148,568 Amortization of deferred financing fees 68,598 45,571 Stockholder related costs 26,285 30,539 Directors fees 66,250 34,500 Insurance expense 57,539 54,598 Stock option compensation - 5,700 Other expenses 108,621 333,059 ------------- ------------- Expenses before credit from Adviser 6,227,902 2,680,828 ------------- ------------- Credit to base management and incentive fees from Adviser (1,288,565) (302,765) ------------- ------------- Total expenses net of credit to base management and incentive fees 4,939,337 2,378,063 ------------- ------------- NET INVESTMENT INCOME BEFORE INCOME TAXES 5,668,407 4,967,948 ------------- ------------- Income tax expense - 51,680 ------------- ------------- NET INVESTMENT INCOME 5,668,407 4,916,268 ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Realized loss on sale of investments (37,004) - Realized gain on settlement of derivative 8,160 13,647 Unrealized depreciation on derivative (12,093) (65,221) Net unrealized (depreciation) appreciation on investments (4,888,519) 198,735 ------------- ------------- Net gain (loss) on investments (4,929,456) 147,161 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 738,951 $ 5,063,429 ============= ============= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic $ 0.05 $ 0.44 ============= ============= Diluted $ 0.05 $ 0.43 ============= ============= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 14,589,754 11,573,200 Diluted 14,589,754 11,767,902 GLADSTONE CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Year Ended September 30, 2007 2006 ------------- ------------- INVESTMENT INCOME Interest income - investments $ 35,412,893 $ 25,646,746 Interest income - cash and cash equivalents 255,489 38,381 Interest income - notes receivable from employees 526,164 441,341 Prepayment fees and other income 491,973 773,378 ------------- ------------- Total investment income 36,686,519 26,899,846 ------------- ------------- EXPENSES Interest expense 7,225,628 3,238,615 Loan servicing 3,624,390 2,907,875 Base Management fee 2,402,049 1,284,414 Incentive fee 4,607,688 - Administration fee 719,256 - Professional fees 522,970 548,326 Amortization of deferred financing fees 267,231 140,143 Stockholder related costs 216,736 303,709 Directors fees 233,720 116,212 Insurance expense 248,877 206,554 Stock option compensation - 285,318 Other expenses 328,143 484,722 ------------- ------------- Expenses before credit from Adviser 20,396,688 9,515,888 ------------- ------------- Credit to base management and incentive fees from Adviser (5,970,725) (2,068,539) ------------- ------------- Total expenses net of credit to base management and incentive fees 14,425,963 7,447,349 ------------- ------------- NET INVESTMENT INCOME BEFORE INCOME TAXES 22,260,556 19,452,497 ------------- ------------- Income tax expense - 101,917 ------------- ------------- NET INVESTMENT INCOME 22,260,556 19,350,580 ------------- ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on sale of investments 44,494 (903,945) Realized gain on settlement of derivative 39,358 15,014 Unrealized (depreciation) appreciation on derivative (37,970) 31 Net unrealized (depreciation) appreciation on investments (7,354,434) 5,968,555 ------------- ------------- Net gain (loss) on investments (7,308,552) 5,079,655 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 14,952,004 $ 24,430,235 ============= ============= NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE: Basic $ 1.13 $ 2.15 ============= ============= Diluted $ 1.13 $ 2.10 ============= ============= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic 13,173,822 11,381,378 Diluted 13,173,822 11,615,922 GLADSTONE CAPITAL CORPORATION FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended September 30, 2007 2006 ------------- ------------- Per Share Data (1) - ------------------------------------------ Net asset value at beginning of period $ 15.11 $ 13.95 ------------- ------------- Income from investment operations: Net investment income (2) 0.39 0.42 Net unrealized (depreciation) appreciation on investments (2) (0.34) 0.02 Net unrealized depreciation on derivative (2) - (0.01) ------------- ------------- Total from investment operations 0.05 0.43 ------------- ------------- Less distributions: Distributions to stockholders (2)(3) (0.42) (0.42) ------------- ------------- Total distributions (0.42) (0.42) ------------- ------------- Issuance of common stock under shelf offering 0.21 - Issuance of common stock under stock option plan - 1.10 Offering costs (0.02) - Repayment of principal on notes receivable 0.04 - Dilutive effect of share issuance - (1.04) ------------- ------------- Net asset value at end of period $ 14.97 $ 14.02 ============= ============= Per share market value at beginning of period $ 21.46 $ 21.39 Per share market value at end of period 19.52 22.01 Total return-not annualized (4) -7.11% 4.85% Shares outstanding at end of period 14,762,574 12,305,008 Ratios/Supplemental Data - ------------------------------------------ Net assets at end of period $220,958,735 $172,570,487 Average net assets (5) $221,546,022 $162,057,242 Ratio of expenses to average net assets-annualized (6) 11.24% 6.71% Ratio of net expenses to average net assets-annualized (7) 8.92% 6.00% Ratio of net investment income to average net assets-annualized 10.23% 12.13% Year Ended September 30, 2007 2006 ------------- ------------- Per Share Data (1) - ------------------------------------------ Net asset value at beginning of period $ 14.02 $ 13.41 ------------- ------------- Income from investment operations: Net investment income (2) 1.69 1.70 Realized gain (loss) on sale of investments (2) - (0.08) Net unrealized (depreciation) appreciation on investments (2) (0.56) 0.53 ------------- ------------- Total from investment operations 1.13 2.15 ------------- ------------- Less distributions: Distributions to stockholders (2)(3) (1.68) (1.64) ------------- ------------- Total distributions (1.68) (1.64) ------------- ------------- Issuance of common stock under shelf offering 1.55 - Issuance of common stock under stock option plan - 1.19 Offering costs (0.05) - Stock compensation expense - 0.02 Repayment of principal on notes receivable 0.06 0.02 Stock surrendered to settle withholding tax obligation (0.06) - Dilutive effect of share issuance - (1.13) ------------- ------------- Net asset value at end of period $ 14.97 $ 14.02 ============= ============= Per share market value at beginning of period $ 22.01 $ 22.55 Per share market value at end of period $ 19.52 $ 22.01 Total return (4) -4.40% 5.21% Shares outstanding at end of period 14,762,574 12,305,008 Ratios/Supplemental Data - ------------------------------------------ Net assets at end of period $220,958,735 $172,570,487 Average net assets (5) $189,731,888 $155,867,538 Ratio of expenses to average net assets (6) 10.75% 6.16% Ratio of net expenses to average net assets (7) 7.60% 4.84% Ratio of net investment income to average net assets 11.73% 12.42% (1) Based on actual shares outstanding at the end of the corresponding period. (2) Based on weighted average basic per share data. (3) Distributions are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under accounting principles generally accepted in the United States of America. (4) Total return equals the change in the ending market value of the Company's common stock from the beginning of the period taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan. Total return does not take into account dividends that may be characterized as a return of capital. (5) Average net assets are computed using the average balance of net assets at the end of each reporting month. (6) Ratio of expenses to average net assets is computed using expenses before credit from Gladstone Management and including income tax expense. (7) Ratio of net expenses to average net assets is computed using total expenses net of credits to management fee and including income tax expense. CONTACT: Gladstone Capital Corp. Kerry Finnegan, 703-287-5893