Apollo Investment Corporation Announces June 30, 2008 Quarterly Financial Results and September 2008 Quarterly Dividend of $0.52 per Share
SOURCE:
Apollo Investment Corporation
2008-08-06 15:15:00
Apollo Investment Corporation Announces June 30, 2008 Quarterly Financial Results and September 2008 Quarterly Dividend of $0.52 per Share
NEW YORK, NY–(EMWNews – August 6, 2008) – Apollo Investment Corporation (
today announces financial results for its fiscal quarter ended June 30,
2008. Additionally, Apollo Investment Corporation announces that its Board
of Directors has declared its second fiscal quarter September 2008 dividend
of $0.52 per share, payable on September 29, 2008 to stockholders of record
as of September 18, 2008. The dividend will be paid from taxable
earnings whose specific tax characteristics will be reported to
stockholders on Form 1099 after the end of the calendar year.
HIGHLIGHTS:
At June 30, 2008:
Total Assets: $4.3 billion
Investment Portfolio: $3.3 billion
Net Assets: $2.3 billion
Net Asset Value per share: $15.93
Portfolio Activity for the Quarter Ended June 30, 2008:
Total investments made during the quarter: $185 million
Sales and prepayments during the quarter: $89 million
Number of new portfolio companies invested: 6
Number of portfolio company exits: 3
Operating Results for the Quarter Ended June 30, 2008 (in thousands, except
per share amounts):
Net investment income: $46,313
Net realized gains (losses): ($29,818)
Net change in unrealized appreciation (depreciation): $55,345
Net increase (decrease) in net assets from operations: $71,840
Net investment income per share: $0.35
Net realized gains (losses) per share: ($0.22)
Net change in unrealized appreciation (depreciation) per share: $0.42
Earnings Per Share: $0.55
Conference Call/Webcast at 11:00 a.m. ET on August 7, 2008
The Company will host a conference call and webcast at 11:00 a.m. (Eastern
Time) on Thursday, August 7, 2008 to discuss its quarterly results. All
interested parties are welcome to participate. You can access the
conference call by dialing (888) 802-8579 approximately 5-10 minutes prior
to the call. International callers should dial (973) 633-6740. All callers
should reference Apollo Investment Corporation or “conference ID
#55482823”. An archived replay of the call will be available through
August 21, 2008 by calling (800) 642-1687. International callers please
dial (706) 645-9291. For all replays, please reference pin #55482823. In
addition, you can access our audio webcast within the Investor Relations
section of our website at www.apolloic.com. An archived replay of the
webcast will also be available on our website later that same day.
Portfolio and Investment Activity
During the three months ended June 30, 2008, we invested $184.7 million,
across 6 new and 8 existing portfolio companies. This compares to investing
$738.6 million in 13 new and 5 existing portfolio companies for the three
months ended June 30, 2007. Investments sold or prepaid during the three
months ended June 30, 2008 totaled $89.1 million versus $346.9 million for
the three months ended June 30, 2007.
At June 30, 2008, our net portfolio consisted of 74 portfolio companies and
was invested 23% in senior secured loans, 54% in subordinated debt, 7% in
preferred equity and 16% in common equity and warrants versus 64 portfolio
companies invested 22% in senior secured loans, 56% in subordinated debt,
6% in preferred equity and 16% in common equity and warrants at June 30,
2007.
The weighted average yields on our senior secured loan portfolio,
subordinated debt portfolio and total debt portfolio at our current cost
basis were 9.7%, 12.9% and 12.0%, respectively, at June 30, 2008. At June
30, 2007, the yields were 13.1%, 11.9%, and 12.8%, respectively.
Since the initial public offering of Apollo Investment Corporation in April
2004 and through June 30, 2008, total invested capital exceeds $5.3 billion
in 118 portfolio companies. Over the same period, Apollo Investment has
also completed transactions with 81 different financial sponsors.
Senior secured loans and European mezzanine loans typically accrue interest
at variable rates determined on the basis of a benchmark: LIBOR, EURIBOR,
GBP LIBOR, or the prime rate, with stated maturities at origination that
typically range from 5 to 10 years. While subordinated debt issued within
the United States will typically accrue interest at fixed rates, some of
these investments may include zero-coupon, PIK and/or step bonds that
accrue income on a constant yield to call or maturity basis. At June 30,
2008, 60% or $1.7 billion of our interest-bearing investment portfolio is
fixed rate debt and 40% or $1.1 billion is floating rate debt. At June 30,
2007, 66% or $1.6 billion of our interest-bearing investment portfolio was
fixed rate debt and 34% or $830.7 million was floating rate debt.
RESULTS OF OPERATIONS
Results comparisons are for the three months ended June 30, 2008 and June
30, 2007.
Investment Income
For the three months ended June 30, 2008 and June 30, 2007, gross
investment income totaled $91.0 million and $88.9 million, respectively.
The increase in gross investment income for the three months ended June 30,
2008 was primarily due to the growth of our investment portfolio as
compared to the previous period. Origination, closing and/or commitment
fees associated with investments in portfolio companies are accreted into
interest income over the respective terms of the applicable loans.
Expenses
Net expenses totaled $44.6 million and $34.2 million, respectively, for the
three months ended June 30, 2008 and June 30, 2007, of which $11.6 million
and $10.8 million, respectively, were performance-based incentive fees and
$13.9 million and $7.6 million, respectively, were interest and other
credit facility expenses. Net expenses exclusive of performance-based
incentive fees and interest and other credit facility expenses for the
three months ended June 30, 2008 and June 30, 2007 were $19.2 million and
$15.7 million, respectively. Of these expenses, general and administrative
expenses totaled $3.1 million and $2.8 million, respectively, for the three
months ended June 30, 2008 and 2007. Expenses consist of base investment
advisory and management fees, insurance expenses, administrative services
fees, professional fees, directors’ fees, audit and tax services expenses,
and other general and administrative expenses. The increases in net
expenses from the three month period ended June 30, 2007 to the three month
period ended June 30, 2008 were primarily related to increases in base
management fees and other general and administrative expenses from the
growth of our investment portfolio as compared to the previous periods.
Net Investment Income
The Company’s net investment income totaled $46.3 million and $54.8 million
or $0.35 per share and $0.53 per share, respectively, for the three months
ended June 30, 2008 and June 30, 2007.
Net Realized Gains (Losses)
The Company had investment sales and prepayments totaling $89.1 million and
$346.9 million, respectively, for the three months ended June 30, 2008 and
2007. Net realized losses for the three months ended June 30, 2008 and June
30, 2007 were $29.8 million and $20.7 million, respectively. During the
three months ended June 30, 2008, losses were derived primarily from the
sale of American Asphalt which realized a loss of $26.0 million, reversing
an unrealized loss of $25.4 million as of March 31, 2008.
Net Unrealized Appreciation (Depreciation) on Investments, Cash Equivalents
and Foreign Currencies
For the three months ended June 30, 2008 the Company recognized net
unrealized appreciation on its investments, cash equivalents, foreign
currencies and other assets and liabilities totaling $55.3 million. For
the three months ended June 30, 2007, net unrealized appreciation on the
Company’s investments, cash equivalents, foreign currencies and other
assets and liabilities increased $143.7 million. At June 30, 2008, net
unrealized depreciation totaled $141.8 million versus net unrealized
appreciation of $235.9 million at June 30, 2007.
Net Increase (Decrease) in Net Assets From Operations
For the three months ended June 30, 2008, the Company had a net increase in
net assets resulting from operations of $71.8 million. For the three
months ended June 30, 2007 the Company had a net increase in net assets
resulting from operations of $177.7 million. The net increase in net
assets from operations per share was $0.55 for the three months ended June
30, 2008. For the three months ended June 30, 2007, the net increase in
net assets from operations per share was $1.72.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s liquidity and capital resources are generated and available
through periodic follow-on equity offerings, through its senior secured,
multi-currency $1.7 billion, five-year, revolving credit facility maturing
in April 2011, through investments in special purpose entities in which we
hold and finance particular investments on a non-recourse basis, as well as
from cash flows from operations, investment sales and prepayments of senior
and subordinated loans and income earned from investments and cash
equivalents. At June 30, 2008, the Company has $0.97 billion in
borrowings outstanding and $0.73 billion remaining unused. In the future,
the Company may raise additional equity or debt capital off its shelf
registration or may securitize a portion of its investments among other
considerations. The primary use of funds will be investments in portfolio
companies, cash distributions to our stockholders and for other general
corporate purposes. On May 16, 2008, the Company closed on its most recent
follow-on public equity offering of 22.3 million shares of common stock at
$17.11 per share raising approximately $369.6 million in net proceeds.
Dividends
Dividends paid to stockholders for the three months ended June 30, 2008 and
June 30, 2007 totaled $74.0 million or $0.52 per share versus $52.8 million
or $0.51 per share, respectively. Tax characteristics of all dividends
will be reported to shareholders on Form 1099 after the end of the calendar
year.
We intend to continue to distribute quarterly dividends to our
stockholders. Our quarterly dividends, if any, will be determined by our
Board of Directors.
We have elected to be taxed as a RIC under Subchapter M of the Internal
Revenue Code of 1986. To maintain our RIC status, we must distribute at
least 90% of our ordinary income and realized net short-term capital gains
in excess of realized net long-term capital losses, if any, out of the
assets legally available for distribution. In addition, although we
currently intend to distribute realized net capital gains (i.e., net
long-term capital gains in excess of short-term capital losses), if any, at
least annually, out of the assets legally available for such distributions,
we may in the future decide to retain such capital gains for investment.
We maintain an “opt out” dividend reinvestment plan for our common
stockholders. As a result, if we declare a dividend, then stockholders’
cash dividends will be automatically reinvested in additional shares of our
common stock, unless they specifically “opt out” of the dividend
reinvestment plan so as to receive cash dividends.
We may not be able to achieve operating results that will allow us to make
dividends and distributions at a specific level or to increase the amount
of these dividends and distributions from time to time. In addition, we may
be limited in our ability to make dividends and distributions due to the
asset coverage test for borrowings when applicable to us as a business
development company under the 1940 Act and due to provisions in future
credit facilities. If we do not distribute a certain percentage of our
income annually, we will suffer adverse tax consequences, including
possible loss of our RIC status. We cannot assure stockholders that they
will receive any dividends and distributions or dividends and distributions
at a particular level.
APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)
June 30, March 31,
2008 2008
(unaudited)
----------- -----------
Assets
Non-controlled/non-affiliated investments, at
value (cost--$3,108,743 and $3,139,047,
respectively) $ 3,027,822 $ 2,986,556
Controlled investments, at value (cost--$298,275
and $247,400, respectively) 281,042 246,992
Cash equivalents, at value (cost--$896,445 and
$404,063, respectively) 896,425 403,898
Cash 4,149 8,954
Foreign currency (cost--$3,555 and $2,140,
respectively) 3,553 2,130
Interest receivable 38,755 46,643
Dividends receivable 27,912 23,024
Prepaid expenses and other assets 4,938 5,896
Receivable from investment adviser 4 231
----------- -----------
Total assets $ 4,284,600 $ 3,724,324
----------- -----------
Liabilities
Payable for investments and cash equivalents
purchased $ 1,018,472 $ 142,339
Credit facility payable 965,689 1,639,122
Management and performance-based incentive fees
payable 27,600 26,969
Dividends payable -- 9,368
Interest payable 6,261 6,178
Accrued administrative expenses 90 288
Other liabilities and accrued expenses 1,585 2,152
----------- -----------
Total liabilities $ 2,019,697 $ 1,826,416
----------- -----------
Net Assets
Common stock, par value $.001 per share, 400,000
and 400,000 common shares authorized,
respectively, and 142,221 and 119,894 issued and
outstanding, respectively $ 142 $ 120
Paid-in capital in excess of par 2,352,883 1,983,795
Undistributed net investment income -- 24,959
Distributions in excess of net investment income (2,683) --
Accumulated net realized gain 56,318 86,136
Net unrealized depreciation (141,757) (197,102)
----------- -----------
Total Net Assets $ 2,264,903 $ 1,897,908
----------- -----------
Total liabilities and net assets $ 4,284,600 $ 3,724,324
----------- -----------
Net Asset Value Per Share $ 15.93 $ 15.83
----------- -----------
APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)
--------------------
Three months ended
--------------------
June 30, June 30,
2008 2007
--------- ---------
INVESTMENT INCOME:
From non-controlled/non-affiliated investments:
Interest $ 84,975 $ 74,550
Dividends 3,335 4,026
Other income 197 320
From controlled investments:
Dividends 2,452 50
Other income -- 10,000
--------- ---------
Total Investment Income 90,959 88,946
--------- ---------
EXPENSES:
Management fees $ 16,022 $ 12,996
Performance-based incentive fees 11,578 10,835
Interest and other credit facility expenses 13,917 7,607
Administrative services expense 1,868 1,461
Other general and administrative expenses 1,347 1,350
--------- ---------
Total expenses 44,732 34,249
Expense offset arrangement (86) (61)
--------- ---------
Net expenses 44,646 34,188
--------- ---------
Net investment income $ 46,313 $ 54,758
--------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
CASH EQUIVALENTS AND FOREIGN CURRENCIES:
Net realized gain (loss):
Investments and cash equivalents (29,230) (17,000)
Foreign currencies (588) (3,743)
--------- ---------
Net realized loss (29,818) (20,743)
--------- ---------
Net change in unrealized gain (loss):
Investments and cash equivalents 54,889 149,922
Foreign currencies 456 (6,215)
--------- ---------
Net change in unrealized gain 55,345 143,707
--------- ---------
Net realized and unrealized gain from
investments, cash equivalents and foreign
currencies 25,527 122,964
--------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 71,840 $ 177,722
--------- ---------
EARNINGS PER SHARE $ 0.55 $ 1.72
--------- ---------
About Apollo Investment Corporation
Apollo Investment Corporation is a closed-end investment company that has
elected to be treated as a business development company under the
Investment Company Act of 1940. The Company’s investment portfolio is
principally in middle-market private companies. From time to time, the
Company may also invest in public companies. The Company invests primarily
in senior secured loans and mezzanine loans and equity in furtherance of
its business plan. Apollo Investment Corporation is managed by Apollo
Investment Management, L.P., an affiliate of Apollo Management, L.P., a
leading private equity investor.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties, including, but not limited to,
statements as to our future operating results; our business prospects and
the prospects of our portfolio companies; the impact of investments that we
expect to make; the dependence of our future success on the general economy
and its impact on the industries in which we invest; 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.
We may use words such as “anticipates,” “believes,” “expects,” “intends,”
“will,” “should,” “may” and similar expressions to identify forward-looking
statements. Such statements are based on currently available operating,
financial and competitive information and are subject to various risks and
uncertainties that could cause actual results to differ materially from our
historical experience and our present expectations. Undue reliance should
not be placed on such forward-looking statements as such statements speak
only as of the date on which they are made. We do not undertake to update
our forward-looking statements unless required by law.
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