Washington DC-based finance firm Allied Capital Corp, which said last month it defaulted on a revolving credit facility, reported a drop in net income for the fourth quarter and all of last year. It also said that longtime CEO William Walton was stepping down but would remain as chairman of the board.

For the year ended 31 December 2008, net investment income was $213.2 million or $1.23 per share compared to net investment income of $141.0 million or $0.91 per share for the year ended 31 December 2007. For the year ended 31 December 2008, the company had net realized losses of $129.4 million or $0.75 per share. For the year ended 31 December 2007, the company had net realised gains of $268.5 million or $1.74 per share.

Net loss for the year ended 31 December, 2008, was $1.0 billion or $6.01 per share, as compared to net income of $153.3 million or $0.99 per share for the year ended 31 December, 2007.

For the quarter ended 31 December 2008, net investment income was $34.2 million or $0.19 per share compared to net investment income of $58.0 million or $0.37 per share for the quarter ended 31 December 2007. For the quarter ended 31 December 2008, the company had net realized losses of $176.7 million or $0.99 per share compared to net realized losses of $46.4 million or $0.30 per share for the quarter ended 31 December 2007.

For the quarter ended 31 December, 2008, the sum of net investment income and net realized losses resulted in a loss of $142.6 million or $0.80 per share, as compared to income of $11.6 million or $0.07 per share for the quarter ended 31 December, 2007.

Net loss for the quarter ended 31 December, 2008, was $578.8 million or $3.24 per share, as compared to net income of $27.5 million or $0.18 per share for the quarter ended 31 December 2007.

The company said in a statement that its net income could vary from quarter to quarter due to the recognition of realized gains and losses, as well as unrealized appreciation and depreciation, among other factors.

''As a result, quarterly or annual comparisons of net income may not be meaningful,'' Allied Capital said.

The business development company, which was founded in 1958 and went public in 1960, has investment stakes in more than 100 private, mid-size companies. Last month the company revealed it defaulted on a credit line and is in discussions with its lenders to restructure debt and provide more operational flexibility, but ''there can be no assurance that the company will achieve a comprehensive restructuring,'' said Allied in a statement.

Allied is essentially a publicly traded private-equity company that uses cash from several sources -- common shareholders, debt issues and credit lines. Allied's focus, like that of companies it competes with, is on making investments in middle-market companies. These firms are too big to be funded by community banks and too small for larger investment banks.

The company's shares tumbled in pre-market trading, falling 17 per cent, to 89 cents. A year ago, the firm's shares traded for more than $20.