NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Allied Capital Corporation, a Maryland corporation, is a closed-end management investment company that has
elected to be regulated as a business development company ("BDC") under the Investment Company Act of
1940 ("1940 Act"). Allied Capital Corporation ("ACC") has a wholly owned subsidiary that has also elected to
be regulated as a BDC. Allied Investment Corporation ("Allied Investment") is licensed under the Small Business
Investment Act of 1958 as a Small Business Investment Company ("SBIC"). In addition, the Company has a real
estate investment trust subsidiary, Allied Capital REIT, Inc. ("Allied REIT") and several single- member limited
liability companies established primarily to hold real estate properties.
ACC also owned Allied Capital SBLC Corporation ("Allied SBLC"), a BDC licensed by the Small Business
Administration ("SBA") as a Small Business Lending Company and a participant in the SBA Section 7(a)
Guaranteed Loan Program. On December 31, 2000, ACC acquired BLC Financial Services, Inc. as a private
portfolio company, which then changed its name to Business Loan Express, Inc. ("BLX"). As a part of the
transaction, Allied SBLC was recapitalized as an independently managed, private portfolio company on
December 28, 2000 and ceased to be a consolidated subsidiary of the Company at that time. Allied SBLC was
then subsequently merged into BLX. The results of the operations of Allied SBLC are included in the
consolidated financial results of ACC and its subsidiaries for 1998, 1999 and for 2000 through December 27,
Allied Capital Corporation and its subsidiaries, collectively, are hereinafter referred to as the "Company."
The investment objective of the Company is to achieve current income and capital gains. In order to achieve this
objective, the Company invests in private and undervalued public companies in a variety of different industries
and in diverse geographic locations.
On December 31, 1997, Allied Ca